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LIPPINCOTT'S  COLLEGE  TEXTS 

AGRICULTURE 

EDITED  BY  KARY  C.  DAVIS,  Ph.D. 

AGRICULTURAL 
ECONOMICS' 


JAMES  E.  BOYLE,  Ph.D.  (J 

EXTENSION    PROFESSOR   OF   RURAL    ECONOMY,    COLLEGE    OF  AGRICULTURE, 
CORNELL   UNIVERSITY 


90  ILLUSTRATIONS  IN  THE  TEXT 


PHILADELPHIA,  LONDON,  CHICAGO 
J.  B.  LIPPINCOTT  COMPANY 


^Z}^ 

^ 


,.-- 


COPYRIGHT,    192 1,  BY  J.   B.  LIPPINCOTT  COMPANY 


MAIN  UBRA 


PRINTED   BY  J.    B,   LIPPINCOTT  COMPANY 

AT  THE  WASHINGTON  SQUARE  PRESS 

PHILADELPHIA,   U.   S.   A. 


THE  PLOUGH 

From  Egypt  behind  my  oxen  with  their  stately  step  and  slow. 
Northward  and  east  and  west  I  went  to  the  desert  sand  and  the 

snow; 
Down  through  the  centuries  one  by  one,  turning  the  clod  to  the 

shower, 
TiU  there's  never  a  land  beneath  the  sun  but  has  blossomed 

behind  my  power. 

I  shd  through  the  sodden  rice  fields  with  my  grunting  hump- 
backed steers, 
I  turned  the  turf  of  the  Tiber  plain  in  Rome's  imperial  years, 
I  was  left  in  the  half -drawn  furrow  when  Coriolanus  came 
Giving  his  farm  for  the  forum's  stir  to  save  his  nation's  name. 

Over  the  seas  to  the  north  I  went;  white  cliffs  and  a  seaboard 

blue; 
And  my  path  was  glad  in  the  English  grass  as  my  stout  red 

Devons  drew; 
My  path  was  glad  in  the  English  grass,  for  behind  me  rippled 

and  curled. 
The  corn  that  was  life  to  the  sailor  men  that  sailed  the  ships  of 

the  world. 

And  later  I  went  to  the  north  again,  and  day  by  day  drew  down 
A  httle  more  of  the  purple  hills  to  join  to  my  kingdom  brown; 
And  the  whaups  wheeled  out  to  the  moorland,  but  the  gray  gulls 

stayed  with  me. 
Where  the  Clydesdales  drummed  a  marching  song  with  their 

feathered  feet  on  the  lea. 

Then  the  new  lands  called  me  westward;  I  found  on  the  prairies 

wide 
A  toll  to  my  stoutest  daring,  and  a  foe  to  test  my  pride; 
But  I  stooped  my  strength  to  the  stiff  black  loam,  and  I  found 

my  labor  sweet. 
As  I  loosened  the  soil  that  was  trampled  firm  by  a  miUion 


Then  further  away  to  the  northward;  outward  and  outward  still 
(But  idle  I  crossed  the  Rockies  for  there  no  plough  will  till!), 
Till  I  won  to  the  plains  unending,  and  there  on  the  edge  of  the 

snow 
I  ribbed  them  the  fenceless  wheat  fields,  and  taught  them  to 

reap  and  sow. 

The  sun  of  the  southland  called  me;  I  turned  her  the  rich  brown 

lines. 
Where  her  Parramatta  peach  trees  grow  and  her  green  Mildura 

vines; 
I  drove  her  cattle  before  me,  her  dust  and  her  dying  sheep, 
I  painted  her  rich  plains  golden,  and  taught  her  to  sow  and  reap. 

From  Egypt  behind  my  oxen,  with  stately  step  and  slow, 

I  have  carried  your  weighitiest  burden,  ye  toilers  that  reap  and 

sow! 
I  am  the  ruler,  the  King,  and  I  hold  the  world  in  fee; 
Sword  upon  sword  may  ring,  but  the  triumph  shall  rest  with  me! 

Will  Ogilvie. 

(Reprinted  from   "The  Australian  and  Other  Verses,"  through  the  courtesy  of  the 
publishers,  Angus  and  Robertson,  Sydney,  N.  S.  W.,  Australia). 


438977 


PREFACE 

Among  the  newer  subjects  which  are  claiming  the  attention  of 
the  thoughtful  citizen  are  Agricultural  Economics  and  Farm 
Management.  Both  are  mere  subdivisions  of  political  economy. 
Farm  management  has  to  do  with  the  farmer's  relation  to  his 
individual  farm,  the  central  principle  being  the  economic  question 
of  how  he  can  secure  the  highest  net  returns.  Agricultural  Eco- 
nomics, however,  is  concerned  with  the  social  aspects  of  agriculture, 
and  has  for  its  first  consideration  the  welfare  of  the  Republic,  and 
for  its  second  consideration  the  welfare  of  agriculture  as  one  com- 
ponent part  of  that  Republic.  Farm  Management  may  be  said 
to  look  on  the  farmer  as  practicing  a  trade;  Agricultural  Economics 
looks  on  the  farmer  as  a  citizen.  The  question  of  rural  credit,  for 
instance,  is,  to  the  teacher  of  Farm  Management,  the  very  concrete 
problem  of  where  and  how  can  farmer  Jones  borrow  money  at  the 
lowest  rate  of  interest:  while  this  same  question  is,  to  the  teacher 
of  Agricultural  Economics,  the  broad  economic  problem  which 
recognizes  the  intimate  and  vital  relation  of  sound  credit  to  both 
the  individual  and  community  prosperity. 

This  book  does  not  pretend  to  be  a  work  of  original  research. 
It  is  a  bringing  together  of  some  new  and  some  old  information 
which  is  scattered  over  a  mde  area  of  books,  papers,  reports,  and 
other  sources.  The  book  is  not  written  for  the  expert  or  speciaUst, 
but  for  the  average  student  of  agricultural  problems. 

My  aim  in  writing  this  book  is  threefold:  (1)  to  interest  the 
reader  in  the  subject  of  Agricultural  Economics;  (2)  to  point  out 
by  a  few  simple  illustrations  the  most  significant  problems  in  this 
field;  (3)  and  finally  to  stimulate  thinking  and  discussion  which 
may  help  towards  the  solution  of  these  problems.  Conversely,  I 
have  not  tried  to  offer  ready-made  remedies  for  the  problems  dis- 
cussed, or  to  formulate  a  set  of  "laws  and  principles,"  or,  indeed, 
to  present  a  large  number  of  entirely  new  facts  to  the  reader.  The 
facts  and  illustrations  given  are  beheved  to  have  real  significance 
in  interpreting  the  deeper  movements  in  agriculture. 

In  peace  or  in  war,  the  food  supply  of  the  nation  is  a  question 
of  fundamental  importance.  And  the  food  supply  is  primarily  a 
question  of  agriculture.  In  brief,  agriculture  is  an  industry  which 
is  fundamental  in  the  political  economy  of  our  Republic.     It  is 


^ 


viii  PREFACE 

vital,  therefore,  that  the  problems  in  this  field  be  discussed  with 
sanity  and  with  understanding.  This  book  represents  an  earnest 
effort  to  select  and  organize  such  facts  as  will  lead  to  this  kind  of  a 
discussion  of  the  subject.  As  cities  increase  in  size,  as  the  farm 
population  proportionately  decreases,  we  are  destined  to  hear  all 
sorts  of  proposals  looking  to  a  cheaper  food  supply  for  the  benefit 
of  the  city  dweller.  Doubtless  some  of  these  proposals  will  have 
considerable  merit;  and  doubtless  others  will  be  fraught  with 
insidious  danger,  such  as  the  proposal  heard  even  now  to  place 
on  our  soil  a  race  of  Oriental  laborers,  with  lower  standards  of  living 
than  our  own. 

The  farmers  of  America  are,  up  to  the  present  moment,  not  so 
well  mobilized  as  the  persons  in  the  other  great  industries  and 
trades.  But  they  are  rapidly  beginning  to  assume  more  conscious 
direction  of  the  processes  of  production,  and  are  asking  for  a  wider 
influence  in  the  economic  and  poUtical  life  of  the  nation.  For 
these  reasons  the  study  of  Agricultural  Economics  is  one  of  very 
great  importance,  both  to  the  dweller  in  the  open  country  and  to 
his  city  cousin. 

It  has  been  said  that  when  a  problem  is  once  clearly  stated  it 
is  already  partly  solved.  So  the  major  effort  of  this  book  is  to 
state  problems  clearly,  in  order  that  their  final  solution  may  be 
promoted.  It  is  hoped  that  the  casual  reader  will  find  these  prob- 
lems interesting.  The  serious  student,  I  trust,  will  find  their  study 
both  interesting  and  profitable. 

James  Ernest  Boyle. 
Ithaca,  New  York, 
January,  1921. 


CONTENTS 

Chapter  Page 

I.  Agriculture,  Manufacturing,  Commerce 1 

II.  Anarchy  of  Agriculture 15 

III.  Farming  versus  Land  Speculation 24 

IV.  The  "Back  to  the  Land"  Movement 31 

V.  Land  Tenure 53 

VI.  Economic  Condition  of  the  Farmer 83 

VII.  Agricultural  Labor 96 

VIII.  Agricultural  Machinery  and  the  Trust  Question 115 

IX.  Marketing  and  the  Middleman 130 

X.  Cooperation 158 

XI-  Credit 174 

XII.  Transportation 188 

XIII.  Insurance 205 

XIV.  Cold  Storage 214 

XV.  Agricultural  Prices  and  Valorization 225 

XVI.  Cost  of  Production  and  Farm  Accounting 250 

XVII.  Speculation 262 

XVIII.  The  Agricultural  Press 279 

XIX.  Farmers'  Organizations 285 

XX.  State  Aid 312 

XXI.  The  County  Agent 329 

XXII.  The  Grain  Trade 337 

XXIII.  Live-stock  and  Meat  Industry 365 

XXIV.  Taxation  Problems;  Single  Tax;  Protective  Tariff 393 

XXV.  Foreign  Competition 409 

XXVI.  Food  Supply  Problem 425 

Index 437 . 


IX 


AGRICULTURAL  ECONOMICS 


CHAPTER  I 

AGRICULTURE,  MANUFACTURING,  COMMERCE 

The  Rank  of  Agriculture  Among  Our  Industries. — For  many- 
years  of  our  history  agriculture  was  the  leading  industry.  Agri- 
culture came  first  as  to  the  amount  of  capital  invested,  first  as  to 
the  value  of  the  output,  and  first  as  to  the  number  of  persons 
employed.  This  economic  primacy  gave  agriculture  an  important 
place  in  the  early  political  life  of  the  nation,  many  congressmen 
and  even  several  early  presidents  being  actual  farmers.  George 
Washington  for  instance  was  born  and  reared  on  the  farm,  died  on 
the  farm,  and  lies  buried  on  the  farm.  In  Washington's  day 
wealth,  intelligence,  dignity,  influence,  all  went  with  farming. 
This  primacy  of  agriculture  has  been  lost  due  to  the  economic 
evolution  of  our  country  and  the  development  of  its  vast  and  vari- 
ous resources.  At  the  outset,  then,  let  us  examine  some  of  the 
evidences  of  this  change  in  the  rank  of  agriculture.  The  United 
States  Census  Report  for  1900  describes  the  situation  in  these  words: 

"  Down  to  1880,  or  to  some  time  between  1880  and  1890,  agriculture  was 
the  principal  source  of  wealth  in  the  United  States.  At  the  last  census  (1890) 
the  value  of  farm  products  was  exceeded  by  that  of  manufactured  products. 
At  the  census  of  1900,  the  value  of  farm  products  is  shown  to  have  been 
$4,739,118,752.  In  this  total  there  occur  certain  duphcations  which  the 
Report  on  Agriculture  eliminates,  leaving  a  residue  of  $3,764,177,706  as  the 
actual  net  value  of  all  farm  products  in  the  census  year.  The  net  value  of 
the  products  of  manufactures,  as  computed  in  the  census,  is  $8,370,595,176, 
a  sum  more  than  double  the  value  of  the  net  products  of  the  farm.  If  from 
this  net  value  is  eliminated  everything  in  the  way  of  crude  materials  contrib- 
uted by  the  farm,  the  forest,  the  mine,  and  the  sea,  there  is  still  left  a  value  of 
$5,981,454,234;  and  on  this  basis  it  appears  that  the  contribution  of  manu- 
factures and  the  mechanical  arts  to  the  wealth  of  the  country  exceeds  the  con- 
tribution of  agriculture  by  more  than  a  billion  dollars.  \  The  figures  indicate 
that  rapid  as  has  been  the  development  of  agricultural  interests,  manufactures 
have  advanced  even  more  rapidly. 

"This  conclusion  is  strengthened  by  a  consideration  of  the  statistics  of 
occupations  as  presented  at  the  several  censuses  .  .  .  During  the  twenty 
years,  1880  to  1900,  the  number  engaged  in  agricultural  pursuits  increased 
34.6  per  cent,  while  the  number  engaged  in  manufacturing  increased  87.2 
per  cent." 

The  1910  census  compares  the  two  thirty-year  periods,  1850 
to  1880  and  1880  to  1910.    "  During  the  first  of  these  two  periods," 

1 


AGRICULTURE,  MANUFACTURING,  COMMERCE 


/^SO  1860  1870  /880  1890 

Fig.  1. — Agriculture — rank  as  an  industry. 


/900 


/9/0 


NUMBER  OF  PERSONS  ENGAGED  3 

states  the  Census  Report,  'Hhe  agricultural  industry,  so  far  as  can 
be  measured  by  statistics  as  to  the  number  of  farms,  farm  land, 
and  improved  land,  more  than  kept  pace  with  the  population." 
But  it  has  failed  to  do  so  since.  "The  population  increased  116.3 
per  cent  between  1850  and  1880,  while  the  number  of  farms  in- 
creased 151.9  per  cent;  but  from  1880  to  1910  the  population 
increased  83.4  per  cent,  the  number  of  farms  only  58.7  per  cent, 
and  the  improved  farm  land  only  68  per  cent." 

It  is  true  that  the  value  of  farm  property  showed  a  gain  of  one 
hundred  per  cent  in  the  ten-year  period  from  1900  to  1910,  increas- 
ing from  some  $20,000,000,000  to  $40,000,000,000.  Yet  this  gain 
of  $20,000,000,000  is  rather  an  illusory  gain,  since  $15,000,000,000 
of  it  represent  merely  an  increase  in  land  value  and  no  added 
investment  of  capital  whatever.  This  "unearned  increase"  in 
value  therefore  is  a  detriment  rather  than  a  benefit  to  the  coun- 
try Qf^'  large,  and  is  perhaps  an  evil  to  the  farmers  themselves. 
For  it  makes  farms  constantly  higher  in  price  to  the  would-be 
farmer  and  hence  ownership  more  difficult  to  attain.  It  means 
more  renters  and  more  mortgages.  For  more  and  more  it  is 
becoming  true  that  the  farmers  do  not  own  the  farms.  The 
city  investor  or  speculator  or  the  "retired  farmer"  is  becom- 
ing the  farm  owner,  and  is  therefore  getting  the  benefit  of  the 
$15,000,000,000  increases  in  farm  land  value.  And  the  farmer 
who  is  a  tenant  is  helping  pay  the  penalty.  The  report  of  the 
Thirteenth  Census  tells  us,  "It  may  be  noted  that  at  least  since 
1880  (and  probably  further  back  also)  the  farms  operated  by 
tenants  have  in  each  decade  increased  faster  than  those  operated 
by  owners  "  (Fig.  1). 

Number  of  Persons  Engaged. — There  has  been  a  gradual  in- 
crease in  the  number  of  persons  engaged  in  agriculture,  manu- 
facturing, professional  service,  domestic  and  personal  service,  and 
in  transportation.  But  the  proportion  engaged  in  agriculture  quite 
naturally  shows  a  gradual  decline.  In  1870,  48  per  cent  of  the 
workers  were  in  agriculture;  in  1910,  only  33  per  cent.  There  are 
approximately  six  million  farms  in  the  United  States,  and  allowing 
to  each  farm  a  family  of  five  persons,  we  have  thirty  million  of  our 
population  living  in  the  open  country.  There  remain  therefore 
over  seventy  million  who  are  living  in  cities  and  villages.  The 
significance  of  these  figures  is  important  from  the  standpoint  of 
an  agrarian  party  or  an  agrarian  policy  in  the  United  States.  Any 
such  a  party  with  a  policy  of  increasing  agricultural  profits  at  the 
expense  of  the  consumer  would  be  in  a  very  hopeless  minority. 


4  AGRICULTURE,  MANUFACTURING,  COMMERCE 

36 


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/eeo 


1670  /Sep 

Year 


/690 


1900 


f9l0 


Fig.  2. — Value  of  farm  property,  years  1850-1910. 


VALUE  OF  EXPORTS  5 

However,  any  organization  of  farmers,  along  economic  lines,  with 
a  policy  of  '^ savings,  not  profits,"  or  ''stabilizing  of  profits,"  would 
not  collide  with  the  self  interests  of  the  majority. 

Capital  Invested. — Mention  has  already  been  made  of  the 
capital  invested  in  agricultm*e  and  manufacturing,  but  not  of  the 
difficulty  of  interpreting  the  word  capital  as  applied  to  agriculture. 
The  census  figures  for  1910  show  total  farm  property,  for  instance, 
of  forty  billion  dollars.  But  of  this  forty,  twenty-eight  is  land 
value.  And  of  this  twenty-eight  billions,  fifteen  billions  is  increase 
in  land  values  since  1900,  and  represents  no  additional  investment 
of  capital.  In  1910  some  twelve  billions  of  dollars  represented 
the  value  of  farm  buildings,  implements  and  machinery,  and 
domestic  animals,  poultry,  and  bees.  While  land  value  increased 
in  ten  years  118  per  cent,  these  buildings,  implements,  animals, 
etc.,  increased  in  value  but  71  per  cent  (Fig.  2). 

In  manufacturing,  however,  in  1910,  there  was  a  capital 
investment  of  eighteen  billion  dollars — an  increase  over  1900  of 
105  per  cent.  In  banking  in  1910  (in  commercial  banks  only), 
there  was  invested  capital  to  the  amount  of  three  billion  dollars 
— a  gain  in  ten  years  of  114  per  cent.  In  transportation  in  1910 
(counting  steam  railroads  alone)  the  capitahzation  was  seventeen 
billion  dollars,  an  increase  in  ten  years  of  42  per  cent. 

Value  of  Product. — ^We  cannot  of  course  compare  the  value  of 
the  products  of  all  the  great  industries  since  these  values  are  not 
a  matter  of  record  except  in  the  cases  of  agriculture  and  manu- 
facturing. Here,  however,  since  1870,  the  value  of  the  product  of 
manufacturing  has  been  more  than  twice  the  value  of  the  product 
of  agriculture.  According  to  the  classification  of  the  1910  census, 
the  values  stood  as  follows:  agriculture,  eight  billion  dollars; 
manufacturing,  twenty  billions  (Fig.  3).  A  study  of  the  census 
figures  shows  that  America,  like  some  European  countries,  is 
now  primarily  a  manufacturing  country. 

Value  of  Exports. — In  time  past  our  chief  exports  were 
foodstuffs.  This  has  now  changed.  Thus  in  1880  exports  of  food- 
stuffs were  four  times  the  amount  of  manufactures  exported. 
In  1912,  however,  exports  of  manufactures  were  two  and  a  half 
times  as  large  as  exports  of  foodstuffs.  In  other  words,  exports 
of  foodstuffs  remained  at  about  four  hundred  million  of  dollars, 
while  exports  of  manufactures  grew  from  a  hundred  and  twenty 
miUions  to  over  a  billion  dollars. 

However,  agriculture  has  many  exportable  products  which 
are  not  foodstuffs,  chiefly  cotton   (Fig.  4).    Yet  even  counting 


6  AGRICULTURE,  MANUFACTURING,  COMMERCE 


}Q7hl880    J68H890   1891-1900    I90/-I9/0 
Decade 

Fig.  3. — Agricultural  progress,  1870-1910,  showing  increases  by  per  cent. 


VALUE  OF  EXPORTS  7 

the  total  products  of  agriculture,  over  half  of  our  exports  are  now 
of  other  products  than  those  of  agriculture.  In  1913,  for  instance, 
our  exports  amounted  to  a  total  of  $2,465,884,150;  of  this  amount 


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-^:-         ■.% 

I 


i 


i^ua-i^^^         iy09-i9/0  1910-1911  li^n-i^i^ 

Fig.  4. — Cotton  production  and  farm  value  of  cotton. 

the  products  of  agriculture  represent  but  $1,123,651,985,  or  45 
per  cent.  Whereas  agricultural  exports  remain  about  the  same 
from  year  to  year,  or  increase  very  slightly,  the  imports  of   agri- 


y 


J8  AGRICULTURE,  MANUFACTURING,  COMMERCE 

cultural  products  show  a  steady  and  rapid  growth.  Considering 
both  our  imports  and  exports  of  agricultural  products  we  find 
that  our  net  exports  are  only  about  $300,000,000  a  year.  The  big 
agricultural  exports  are,  of  course,  cotton,  packing-house  products, 
grain  (especially  wheat  and  flour)  and  tobacco.  The  big  agricul- 
tural imports  are  coffee,  leather  and  hides,  sugar,  rubber,  and  silk. 

Agricultural  Land  of  the  United  States. — ^The  United  States 
has  in  its  vast  land  area  of  two  billion  acres  enough  land  to  provide 
each  man,  woman  and  child  of  the  population  a  twenty-acre  tract. 
Of  com^e,  a  large  share  of  this  land  is  not  tillable.  Much  now  is 
and  must  ever  remain  desert  or  mountain.  At  the  1910  census, 
only  eight  hundred  miUion  acres  was  "land  in  farms,"  and  only 
half  of  this  was  "improved."  By  improved  land  is  meant  all  land 
regularly  tilled,  or  mowed,  land  pastured  and  cropped  in  rotation, 
land  lying  fallow,  land  in  gardens,  orchards,  vineyards,  and  nur- 
series, and  land  occupied  by  farm  buildings.  The  unimproved 
land  in  farms  is,  as  indicated  above,  some  four  hundred  million 
acres.  In  other  words,  our  thirty  million  farming  population  on 
six  miUion  farms  is  actually  utilizing  but  one-fourth  of  our  land 
area.  The  average  acreage  of  the  "farm"  in  1910  was  one  hundred 
and  thirty-eight  acres;  of  the  "improved  land"  in  the  farm, 
seventy-five  acres.  In  1900  the  average  of  improved  land  per  farm 
was  seventy-two  acres,  which  indicates  a  slight  tendency  to  increase 
the  amount  of  land  farmed  by  one  farmer. 

Exploitation  and  Conservation. — The  economic  history  of  the 
twentieth  century  in  the  United  States  begins  with  the  birth  of 
the  doctrine  of  conservation — conservation  of  our  soils,  our  waters, 
oiu"  rivers  and  our  forests.  This  beginning  marks  a  reaction  against 
the  nineteenth  century  of  wanton  and  feverish  exploitation  of 
these  same  resources.  The  "soil-robbery"  carried  on  by  isolated 
and  competing  individuals,  and  known  as  farming  during  these 
hundred  years,  left  a  legacy  of  soil  exhaustion  problems  for  future 
generations  to  solve. 

Better  Business  for  Farmers. — Sir  Horace  Plunkett  declared 
the  rural  hfe  problems  in  the  United  States  to  be  better  farming, 
better  business,  better  living.  The  report  of  the  Roosevelt  Country 
Life  Commission  found  that  from  the  commercial  standpoint 
farming  is  not  profitable  enough,  considering  the  labor,  energy 
and  risks  involved,  and  the  social  and  sanitary  conditions  of  the 
open  country. 

The  unattached  man  on  the  farm  stands  alone  against  the  better 
mobilized  interests  of  manufacturing  and  commerce.     As  a  pro- 


BETTER  BUSINESS  FOR  FARMERS  9 

ducer,  he  has  been  aided  by  the  government.  "Our  attention  has 
been  concentrated  almost  exclusively,"  says  the  introduction  of 
the  report  of  the  Country  Life  Commission,  "on  getting  better 
farming.  .  .  .  Practically  the  whole  of  this  effort  has  hitherto 
been  directed  towards  increasing  the  production  of  crops.  In  the 
beginning  this  was  unquestionably  the  right  thing  to  do.  The 
farmer  must  first  of  all  grow  good  crops  in  order  to  support  himself 
and  his  family.  But  when  this  has  been  secured,  the  effort  for 
better  farming  should  cease  to  stand  alone,  and  should  be  accom- 
panied by  the  effort  for  better  business  and  better  living  on  the 
farm."  Thus  the  cotton  growers  of  the  South  were  taught  how 
to  increase  the  production  of  cotton,  upon  the  theory  that  it  is  a 
blessing  to  make  two  blades  of  grass  grow  where  only  one  grew 
before.  But  the  report  of  the  Secretary  of  the  New  Orleans  Cotton 
Exchange  states  that  while  the  cotton  crop  of  1911-12  increased 
by  four  million  bales  over  the  1910-11  crop,  the  price  received  by 
the  planter  was  over  one  hundred  million  dollars  less.  On  the 
other  hand,  the  crop  of  1909-10  showed  a  falling  off  in  production 
over  1908-09  by  over  three  million  bales,  but  an  increase  in  value 
of  a  hundred  miUion  dollars.  Thus  in  1911  the  energies  of  the 
Southern  planters,  devoted  to  cotton  production,  resulted  in  over- 
production of  this  one  crop  and  an  under-production  of  other  crops 
which  the  South  needed,  such  as  corn  and  hay,  and  also  swine.  In 
various  important  public  meetings  and  congresses  in  the  South, 
the  farmers  there  have  sought  to  stabilize  their  net  returns  by 
limiting  the  output  of  cotton  to  regular  trade  demands,  while  at 
the  same  time  increasing  their  output  of  food  crops  and  other 
crops  needed  by  the  South.  This  move  for  "limitation  of  output" 
has  been  misunderstood  by  the  public  since  the  practice  itself  has 
been  associated  with  some  of  the  methods  of  industrial  warfare 
used  by  some  radical  labor  unionists.  In  the  case  of  the  Southern 
planters,  however,  the  agitation  has  been  to  produce  a  different 
output,  not  a  smaller  output — different  crops,  not  smaller  crops. 
It  signifies  a  groping  after  a  method  of  coordinating  supply  and 
demand.  Lack  of  a  balanced  production  is  true  for  all  the  great 
staple  crops,  such  as  wheat  and  oats,  for  instance. 

The  wheat  farmers  produced  a  bumper  crop  in  1906,  seven 
hundred  and  thirty-five  million  bushels.  In  1907  they  produced  a 
hundred  million  bushels  less,  but  got  sixty  million  dollars  more  for  it. 

The  farmers  in  1910  produced  the  enormous  quantity  of 
1,186,000,000  bushels  of  oats  with  a  farm  value  of  $408,000,000. 
Next  year  they  produced  a  crop  of  two  hundred  million  bushels  less, 


10  AGRICULTURE,  MANUFACTURING,  COMMERCE 

but  with  a  farm  value  of  six  million  dollars  more.  In  1912  they 
•  increased  the  oats  production  by  the  unprecedented  amount  of 

five  hundred  million  bushels,  but  the  crop  value  only  increased 
thirty-eight  million  dollars.  Hence  the  problem  of  producing 
/  more  is  not  the  only  problem  of  the  farmer.  It  is  no  longer  his 
greatest  problem.  He  must  produce  more  of  the  right  thing.  As  Sir 
Horace  says,  the  problem  of  better  business  must  be  solved  if  agricul- 
ture is  longer  to  compare  favorably  with  the  other  great  industries. 

Industrial  Concentration. — The  most  striking  economic  differ- 
ence between  agriculture  and  the  other  great  industries  up  to  the 
present  time  is  exhibited  in  the  extent  of  organization  and  con- 
centration in  the  general  industries,  on  the  one  hand,  as  against  the 
/  I  lack  of  organization  and  centralization  in  agriculture,  on  the  other 
hand.    Some  evidence  on  this  point  will  make  the  situation  clear. 

Lumber. — The  Report  of  the  Bureau  of  Corporations  on  the 
lumber  industry  (January  20,  1913),  in  speaking  of  our  standing 
timber,  says  that  these  three  facts  are  shown  by  the  investigation: 
(1)  the  concentration  of  a  dominating  control  of  our  standing  tim- 
ber in  a  comparatively  few  enormous  holdings  steadily  tending 
toward  a  central  control  of  the  lumber  industry;  (2)  vast  specula- 
tive purchase  and  holding  of  timberland  far  in  advance  of  any  use 
thereof;  (3)  an  enormous  increase  in  the  value  of  this  diminishing 
natural  resource,  with  great  profits  to  its  owners.  This  value,  by 
the  very  nature  of  standing  timber,  the  holder  neither  created 
nor  substantially  enhances.  Forty  years  ago,  continues  the  report, 
at  least  three-fourths  of  the  timber  now  standing  was  (it  is  esti- 
mated) pubHcly  owned.  It  passed  from  Government  to  private 
ownership.  The  three  largest  holders  are  now  the  Southern  Pacific 
Company,  the  Weyerhaeuser  Timber  Company,  and  the  Northern 
Pacific  Railway  Company.  ''The  Southern  Pacific  Company 
holdings,''  continued  the  report,  "is  the  greatest  in  the  United 
States — one  hundred  and  six  billion  feet.  It  is  difficult  to  give 
an  adequate  idea  of  its  immensity.  It  stretches  practically  six 
hundred  and  eighty  miles  along  that  railroad  between  Portland  and 
Sacramento.  The  fastest  train  over  this  distance  takes  thirty-one 
hours.  During  all  that  time  the  traveler  thereon  is  passing  through 
lands  a  large  proportion  of  which  for  thirty  miles  on  each  side 
belongs  to  the  railroad,  and  in  almost  the  entire  strip  this  corpora- 
tion is  the  dominating  owner  of  both  timber  and  land." 

"These  three  holdings  have  enough  standing  timber  to  build 
an  ordinary  five-  or  six-room  frame  house  for  each  of  the  sixteen 
million  famifies  in  the  United  States  in  1900."    The  holdings  of 


OTHER  INDUSTRIES  11 

the  two  railroad  companies  are  government  grants,  and  80 
per  cent  of  the  Weyerhaeuser  Timber  Company  holding  was 
bought  from  the  Northern  Pacific  grant.  By  an  interweaving  of 
interest,  corporate  and  personal,  and  by  interlocking  directorates, 
there  is  a  further  real  concentration  of  control  of  a  great  many 
large  holdings  which  on  the  surface  appear  to  be  separate  holdings. 

With  the  concentration  in  timber  is  also  the  concentration  in 
the  land  which  remains  after  the  timber  has  been  cut.  In  Florida 
182  large  timber  holders  have  over  16,990,000  acres,  nearly  one-half 
the  land  area  of  the  state.  In  the  area  investigated  by  the  Bureau 
of  Corporations,  the  large  timber  holders  had  89,744,000  acres — an 
area  greater  than  the  ten  northeastern  states,  Maine,  New 
Hampshire,  Vermont,  Massachusetts,  Rhode  Island,  Connecticut, 
New  York,  New  Jersey,  Delaware,  and  Maryland. 

To  this  concentration  in  timber  and  land  must  be  added  a 
closely  connected  railroad  domination.  "Still  more  impressive," 
contrnues  the  report,  "are  the  possibilities  for  the  future.  In  the 
last  forty  years  concentration  has  so  proceeded  that  one  hundred 
and  ninety-five  holders,  many  interrelated,  now  have  practically 
one-half  of  the  privately  owned  timber  in  the  investigation  area 
(which  contains  80  per  cent  of  the  whole).  This  formidable 
process  of  concentration,  in  timber  and  in  land,  certainly  involves 
grave  future  possibilities  of  impregnable  monopolistic  conditions, 
whose  far-reaching  consequences  to  society  it  is  now  difficult  to 
anticipate  fully  or  to  overestimate.  Such  are  the  past  history, 
present  status,  and  apparent  future  of  our  timber  resources.  The 
underlying  cause  is  our  public  land  policy,  resulting  in  enormous 
loss  of  wealth  to  the  public  and  its  monopolization  by  a  few  inter- 
ests. It  lies  before  us  now  as  a  forcible  object  lesson  for  the  future 
management  of  all  the  natural  resources  still  remaining  in  the 
hands  of  the  Government." 

Other  Industries. — Turning  now  to  other  industries,  we  find 
similar  tendencies  at  work.  The  concentration  of  control  of  a 
large  portion  of  our  banking,  railroad,  and  manufacturing  indus- 
tries in  the  hands  of  a  few  men — of  one  hundred  and  eighty  men 
in  fact — was  shown  by  the  Federal  money  trust  investigation  in 
1912  and  1913.  This  small  group  of  one  hundred  and  eighty  men, 
by  a  system  of  interlocking  directorates,  were  shown  to  be  repre- 
sented in  the  directorships  of  corporations  having  total  resources 
or  capitalization  of  $25,325,000,000.  They  held,  to  specify  more 
in  detail,  three  hundred  and  eighty-five  directorships  in  forty-five 
banks  and  trust  companies  having  total  resources  and  deposits  of 


12  AGRICULTURE,  MANUFACTURING,  COMMERCE 

$6,666,000,000;  fifty  directorship8  in  eleven  insurance  companies 
having  total  assets  of  $2,646,000,000;  one  hundred  and  fifty-five 
directorships  in  thirty-one  railroad  systems  having  a  total  capi- 
taUzation  of  $12,193,000,000  and  a  total  mileage  of  one  hundred 
sixty-three  thousand,  two  hundred;  six  directorships  in  two 
express  companies  and  four  directorships  in  one  steamship  com- 
pany with  a  combined  capital  of  $245,000,000  and  gross  income  of 
$97,000,000;  ninety-eight  directorships  in  twenty-eight  manufac- 
turing, producing,  and  trading  corporations  having  a  total  capital- 
ization of  $3,583,000,000  and  total  gross  annual  earnings  in  excess 
of  $1,145,000,000;  and  forty-eight  directorships  in  nineteen  public 
utility  corporations  having  a  total  capitalization  of  $2,826,000,000 
and  total  gross  annual  earnings  in  excess  of  $428,000,000;  in  all 
seven  himdred  and  forty-six  directorships  in  one  hundred  and 
thirty-four  corporations  with  total  resources  or  capitalization  of 
$25,325,000,000.  It  is  impossible  to  grasp  the  magnitude  of  this 
figure,  but  it  may  help  to  compare  it  with  the  value  of  all  the  farm 
land  in  the  United  States  in  1900,  which  was  but  $28,475,000,000. 
The  interlocking  nature  of  this  concentrated  control  may  be 
illustrated  by  the  following  examples.  The  firm  of  J.  P.  Morgan 
&  Co.,  of  New  York,  had  three  directorships  in  the  Northern 
Pacific  Railway.  This  firm  also  had  three  directorates  in  the  Astor 
Trust  Co.  and  the  Astor  Trust  Co.  had  two  directorates  in  the 
Northern  Pacific,  as  well  as  two  in  the  Southern  Pacific.  In  brief, 
the  firm  of  J.  P.  Morgan  &  Co.  had  twenty-three  directorships  in 
thirteen  banks  and  trust  companies,  which  companies  in  turn  had 
fifteen  directorships  in  the  Northern  Pacific  Railroad  and  eight 
in  the  Southern  Pacific.  To  illustrate  further  the  concentrating 
tendency  in  banking,  railroading,  and  manufacturing,  attention  is 
called  to  the  fact  that  the  firm  of  J.  P.  Morgan  &  Co.,  together  with 
four  neighboring  banks  in  the  city  of  New  York,  held  three  hundred 
and  forty-one  directorships  in  one  hundred  and  twelve  corporations 
having  aggregate  resources  or  capitalization  of  $22,245,000,000. 
To  carry  the  illustration  of  this  tendency  yet  a  step  further,  the 
fact  may  be  cited  that  Mr.  J.  P.  Morgan  testified,^  that  he  named 
the  entire  board  of  directors  of  the  United  States  Steel  Corpora- 
tion. This  was  a  corporation  capitaMzed  at  $1,400,000,000,  with 
some  fifteen  thousand  stockholders,  yet  Mr.  Morgan,  owning  but 
a  small  fraction  of  the  stock,  found  the  power  of  control  of  the 
corporation  entrusted  very  largely  to  his  judgment.     Thus  the 

1  Dec.  19,  1912. 


QUESTIONS  ON  THE  TEXT  13 

institutions  above  mentioned,  especially  the  banks  and  railroads, 
control  resources  vastly  in  excess  of  what  they  own.  They  gain 
thereby  an  importance  and  a  mobilized  economic  power  which  is 
impressive  when  compared  with  the  unorganized  agricultural 
industry.  It  is  only  fair  to  state  that  most  of  the  great  "captains 
of  industry,"  so-called,  have  used  their  economic  power  in  a  con- 
structive manner.  And  this  is  particularly  true  of  the  late  J.  P. 
Morgan,  whose  control  and  direction  of  big  commercial  investments 
was  conspicuously  successful  and  made  more  money  for  others 
than  it  did  for  himself.    Hence  the  secret  of  his  power. 

A  similar  condition  exists  in  Canadian  agriculture,  a  country 
forming  with  the  United  States  an  economic  and  ethnic  unit.  A 
recent  issue  of  the  Grain  Growers'  Guide  of  Winnipeg  ^  discussed 
the  question,  ''Who  owns  Canada?''  The  conclusion  reached  was 
that  forty-two  men  controlled  $4,000,000,000  in  resources,  or  more 
than  one-third  of  Canada's  total  wealth  in  railroads,  banks,  fac- 
tories, mines,  and  lands.  The  railroads  had  been  favored,  says 
this  report,  with  cash  giants,  $208,072,073;  with  land  grants, 
56,052,055  acres;  and  with  bond  guarantees,  $245,070,045.  The 
forty-two  men  named  in  the  article  hold  directorships  in  the 
following  institutions;  thirty  directorships  in  financial  institu- 
tions; forty-two  directorships  in  transportation  companies;  fourteen 
directorships  in  insurance  companies;  and  one  hundred  and 
eighteen  directorships  in  industrial  and  other  corporations. 

Will  Farmers  Own  the  Farm  Land? — The  question  suggests 
itself  at  this  point,  will  not  the  ownership  of  our  farm  lands  even- 
tually pass  largely  into  the  hands  of  a  small  group  of  capitalists, 
just  as  we  have  had  concentration  of  control  of  our  other  great 
industries?  There  are  evidently  many  tendencies  at  work  making 
for  this  very  outcome;  there  are,  however,  opposing  tendencies  in 
operation  which  must  also  be  taken  into  consideration.  The 
question  is  a  most  serious  one,  as  England  and  Ireland  and  other 
countries  have  already  found  out.  But  the  discussion  of  this  prob- 
lem must  be  postponed  to  the  chapter  dealing  with  land  tenure. 

QUESTIONS  ON  THE  TEXT 

1.  State  and  explain  the  rank  of  agriculture  among  our  industries  formerly 

and  now, 

2.  Cite  census  figures  as  evidence  of  this  change. 

3.  Comment  on  the  increase  in  value  of  farm  knds. 

4.  Compare  the  great  industries  as  to  the  number  of  persons  engaged  in  each. 

5.  Compare  the  great  industries  as  to  the  amount  of  capital  invested.    The 

same  for  the  vahie  of  the  product. 

2  June  25,  1913. 


14  AGRICULTURE,  MANUFACTURING,  COMMERCE 

6.  Show  the  past  and  present  rank  of  agricultural  exports  and  imports. 

7.  What  portion  of  the  land  area  of  the  United  States  is  "in  farms"  and  what 

part  is  "improved"?    Explain  these  terms. 

8.  Compare  per  cent  of  increase  in  population,  for  a  series  of  decades,  with 

increase  in  production  of  staple  crops  and  hve  stock.    Show  significance 
of  these  figures  (Fig.  5). 

9.  Show  at  what  periods  of  our  history  we  have  followed  the  doctrines  of 

"exploitation"  and  "conservation"  respectively.    Explain  these  terms. 

10.  According  to  Sir  Horace  Plunkett,  what  is  the  rural  fife  problem  in  the 

United  States? 

11.  State  the  conclusions  of  the  Roosevelt  Country  Life  Commission. 

12.  Show  the  fallacies  and  the  true  principles  involved  in  the  question  of 

increased  production  of  staple  crops. 

13.  Show  the  significance  of  industrial  concentration  in  various  fields  in  recent 

years,  such  as  lumber,  banking,  and  railroads. 

14.  Compare  Canadian  industries  as  to  a  similar  concentration. 

15.  What  do  present  tendencies  indicate  as  to  the  future  ownership  of  farm 

lands  in  the  United  States? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Is  a  large  increase  in  land  values  a  benefit  to  the  farmers  themselves? 

2.  What  are  some  reasons  for  and  against  an  agrarian  party? 

3.  What  portion  of  the  land  surface  of  the  United  States  will  likely  remain 

forever  out  of  use  for  agricultural  purposes?     What  are  the  Hmiting 
factors? 

4.  From  the  farmer's  standpoint  should  there  be  an  increase  or  a  limitation 

of  output  of  the  staple  crops?    Reconcile  the  social  and  the  agrarian 
viewpoint  on  the  question  of  increased  production. 

5.  What  evidence  is  there,  if  any,  of  farm  land  ownership  becoming  central- 

ized in  the  hands  of  big  corporations?    If  corporation  farming  is  more 
efficient  than  individual  farming,  should  it  not  be  promoted? 

6.  Give  examples  from  your  own  village  or  city  of  the  centralization  of  con- 

trol over  local  enterprises  in  a  few  hands  and  explain  the  cause  of  this 
centralization. 

REFERENCES 

1.  U.  S.  Census  Reports.  See  especially  8th  Census,  volume  on  Agricul- 
ture (1864);  10th  Census,  vol.  iii;  12th  Census,  vol.  v,  xvi-xxxvii. 

2.  Report  of  the  Country  Life  Commission.    Edited  by  L.  H.  Bailey. 

3.  Haworth,  Paul  Leland:   "George  Washington,  Farmer." 

4.  Report  of  the  Industrial  Commission,  vol.  x,  i-lxiv  (1901);  vol.  xix, 
45-96  (1902). 

5.  Report  of  the  Bureau  of  Corporations  on  the  Lumber  Industry  (Jan- 
uary 20,  1913). 

6.  Baker,  O.  E.:  "Arable  Land  in  the  United  States, Yearbook,"  Depart- 
ment of  Agriculture,  1918,  433-443. 

7.  Plunkett,  Sir  Horace:  "Rural  Life  Problems  of  the  United  States." 

8.  Yearbooks,  Department  of  Agriculture:  1903  —  "Nation's  Farm 
Surplus  "  479-491.  1904— "Annual  Loss  Caused  by  Insects,"  461-475.  1905 
—"Diversified  Farming  in  the  Cotton  Belt,"  193-219.  1908— "Causes  of 
Social  Rural  Conditions:  Remedy— Small  Farms,"  311-321.  1909— "Farm- 
ing as  an  Occupation  for  City  Bred  Men,"  239-249. 

9.  Wright,  C.  D.:   "Industrial  Evolution  of  the  U.  S.,"  Ch.  12. 

10.  Day,  Clive:    "History  of  Commerce,"  chs.  51,  52,  53. 

11.  NouRSE,  E.  G.:  "Place  of  Agriculture  in  Modern  Industrial  Society." 
Journal  of  Pohtical  Economy,  vol.  xxvii,  466-497;  561-577. 

12.  Hall,    A.    D.:     "A    Pilgrimage  of  British    Farming,"    1910-1912, 
London,  1913. 


CHAPTER  II 

ANARCHY  OF  AGRICULTURE 

Agriculture  at  present  is  an  unorganized  industry,  carried 
on  by  millions  of  competing  units.  The  man  on  the  farm  cooper- 
ates with  nature,  but  not  with  his  fellow-farmer.  The  so-called 
trusts  and  large  combinations  of  capital  have  done  much  to  inte- 
grate the  other  industries.  Agriculture  remains  individualistic.  ^ 
Where  industries  have  reached  the  monopoly  stage  or  the  stage 
of  strong  centralized  control,  we  witness  a  coordination  of  produc- 
tion and  consumption  impossible  elsewhere.  Production  is  planned 
to  fit  the  need;  overproduction  and  underproduction  are  both  to 
a  certain  degree  avoided.  This  is  illustrated  in  the  case  of  refined 
petroleum.  Many  other  large  industries,  without  the  monopoly 
element,  yet  involving  the  investment  of  considerable  capital, 
show  a  reasonably  close  coordination  of  production  and  con- 
sumption. Take  the  mining  of  coal,  for  instance.  Consumption 
needs  increase  as  population  increases,  and  as  industrial  expansion 
grows.  Hence  production  of  coal  should  increase  in  a  constantly 
growing  and  unbroken  ratio  to  meet  this  upward-moving  demand. 
And  such  we  find  to  be  the  case.  A  glance  at  the  census  figures 
reveals  the  situation: 

Coal  production 
Year  (tons  per  capita) 

1849 0.28 

1859 0.46 

1869 0.95 

1879 1.43 

1889 2.24 

1899 3.34 

1909 5.00 

In  manufacturing  the  same  coordination  is  found,  although  not 
so  perfect.  The  demand  is  estimated  in  advance,  and  this  forecast 
is  fairly  accurate.  However,  competing  manufacturers  may  over- 
produce or  underproduce  and  in  this  manner  cause  supply  to  be 
out  of  line  with  demand.  And,  of  course,  in  manufactured  goods, 
we  enter  the  field  where  there  is  more  elasticity  of  demand, 
and  hence  more  Hkelihood  of  failure  of  coordination  of  supply 
and  demand. 

When  we  come  to  the  field  of  agriculture  we  find  the  greatest 
failure  to  coordinate  supply  and  demand.  Here  we  have  an  indus- 
try whose  product  is  in  universal  demand.     And  this  demand, 

15 


16  ANARCHY  OF  AGRICULTURE 

as  shown  by  the  markets,  is  hke  the  supply — not  constant, 
but  is  dependent  in  part  on  fluctuating  production  in  competing 
areas  in  foreign  lands,  in  part  on  prices  and  uses  of  substitutes 
and  alternates. 

Compare  the  two  great  staples,  for  example,  cotton  and  wheat. 
In  1886  the  wheat  crop  was  four  hundred  fifty-seven  milUon 
bushels.  Ten  years  later,  with  ten  million  more  mouths  to  feed 
in  the  United  States,  the  crop  was  thirty-seven  niillion  bushels 
less.  And  ten  years  later,  with  another  ten  million  mouths  to  feed, 
the  crop  has  increased  by  over  three  hundred  million  bushels. 
Eight  years  later,  and  the  crop  has  increased  by  one  hundred  and 
fifty  million  bushels.  Cotton  production  shows  the  same  enormous 
variations.  Taking  the  annual  yield  for  five  consecutive  years, 
we  have  the  following  impressive  figures: 

Cotton  yield 

Year  (bales) 

1908 13,400,000 

1909 10,300,000 

1910 11,900,000 

1911 16,100,000 

1912 14,000,000 

An  increase  of  fifty  per  cent  from  one  year  to  the  next  sometimes 
occurs  in  the  production  of  cotton. 

We  may  likewise  compare  two  minor  crops  which  ,are  yet 
staples  and  for  which  the  demand  is  never  constant,  namely, 
tobacco  and  potatoes. 

Note  the  wide  fluctuations  in  potato  production  from  year  to 
year  in  this  brief  table: 

Potato  crop 
Year  (bushels  per  capita) 

1908 3.10 

1909 4.14 

1910 3.79 

1911 ...• 3.15 

1912 4.50 

Statistics  for  tobacco  production  show  similar  fluctuations: 

Tobacco  production 
Year  (pounds) 

1900 814,300,000 

1905 633,000,000 

1910 1,103,400,000 

1911 905,100,000 

1912 962,000,000 

1913 953,000,000 

Animals  follow  the  same  erratic  course,  often  decreasing  rap- 
idly as  population  increases,  and  again  increasing  far  in  advance 
of  the  slow  and  steady  increase  in  population.  This  phenomenon 
makes  the  farm  output  differ  from  the  factory  output. 


-J 


FACTORS  OF  UNCERTAINTY 


17 


Factors  of  Uncertainty. — Is  it  possible  to  coordinate  production 
and  consumption  of  farm  crops  ?  It  is  impossible  to  forecast 
demand,  and    it  is  clearly  impossible  to  forecast  or  control  the 


181/  -1860 


Iddl  -  /690 
Decac/e 


1801  - 1900 


1901  - 1910 


Fig. 


5. — Forty  years'  progress,  crops  and  livestock,  1870-1910.     Increases  or  decreases  by 
decades  as  compared  with  the  population. 


supply.  There  are  too  many  factors  of  uncertainty.  The  chief 
of  these  factors,  to  name  but  three,  are  climatic  conditions,  plant 
diseases,  and  insect  pests.  A  great  loss  to  the  American  wheat 
crop,  as  well  as  to  the  European,  is  often  caused  by  ''winter- 
killing." The  winter  may  be  too  mild,  too  severe  with  no  snow 
2 


18  ANARCHY  OF  AGRICULTURE 

blanket,  or  may  alternately  thaw  and  freeze  till  the  wheat  is  killed. 
Late  spring  frosts  may  injure  winter  wheat  or  decrease  acreage  of 
spring  wheat.  Early  frosts  in  the  fall  injure  the  wheat,  as  happened 
in  1907  and  1911  in  the  Northwest  and  in  the  Canadian  West. 
Rain  at  harvest  time,  extreme  heat,  prolonged  drouth,  all  may  do 
serious  damage  to  the  wheat  crop.  In  1902  the  Australian  crop 
fell  from  42,500,000  bushels  of  the  previous  year  to  19,800,000 
bushels.  The  1903  crop  rose  to  seventy-five  million.  This  drouth 
had  the  effect  of  raising  the  price  of  wheat  in  the  Pacific  Coast 
States  above  the  Liverpool  price  level.  Bad  weather  conditions 
also  lead  to  rust  and  smut  which  injure  the  crop  seriously.  Hail 
is  an  agent  of  destruction.  Floods,  as  in  Kansas  in  1904,  may 
destroy  large  areas  of  wheat.  This  same  year,  1904,  was  known 
in  America  as  Black  Rust  year,  since  the  total  loss  due  to  this 
cause  was  seventy-five  million  bushels. 

What  has  been  said  about  climatic  conditions  and  the  wheat 
crop  is  believed  to  be  typical  for  other  farm  crops.  And  these 
conditions  can  neither  be  foreseen  nor  removed. 

Insects  and  Diseases. — Among  the  insect  pests  may  be  men- 
tioned the  ''green  bug"  (Toxoptera  graminum).  The  green  bug 
made  its  appearance  in  1890  and  proved  ver>  disastrous  to  wheat 
and  oats  over  a  section  of  the  country  extending  from  Texas  to 
Northern  Missouri  and  eastward  to  Indiana.  Again  in  1900,  and 
still  again  in  1907,  this  green  bug  appeared.  In  1907  it  attacked 
the  wheat  crop  and  almost  totally  destroyed  the  Texas  crop,  and 
seriously  damaged  the  crops  of  Oklahoma  and  Kansas.  The 
wheat  grower  also  is  in  constant  danger  of  serious  loss  from  the 
Hessian  fly,  the  chinch  bug,  the  wheat  midge,  and  the  weevil. 
Other  crops  have  an  equal  number  of  enemies. 

Bulletins  from  our  Agricultural  Experiment  Stations  show  the 
great  variety  and  serious  extent  of  plant  and  animal  diseases  in 
the  United  States.  For  livestock,  as  well  as  field  crops,  are  in 
constant  peril  of  disease.  For  instance,  one  bulletin  of  the  Wis- 
consin Station  alone  treats  of  the  following  pathological  conditions 
and  insect  enemies  in  that  State :  vaccine  treatment  of  chicken-pox 
in  fowls;  contagious  abortion  (described  as  ''the  greatest  menace 
to  our  dairy  cattle");  root  killing  and  body  canker  (in  orchards 
and  small  fruits);  potato  rot  and  blight;  potato  scab;  five  cabbage 
diseases  (black  rot,  soft  rot,  yellows,  black  leg,  club  root);  rust 
and  leaf  blight  of  field  crops;  barley  stripe  disease;  alfalfa  leaf  spot; 
cottony  maple  scale;  cutworms;  onion  maggots  (destroying  from 
fifty  to  ninety-five  per  cent  of  the  crop);  codling  moth  (apple 


EFFECTS  OF  THESE  FACTORS  19 

worm);  plum  curculio;  San  Jose  scale;  house  fly;  onion  thrips  and 
onion  fly  (Thrips  tabaci  and  Pegomya  cepetorum  ''now  threaten 
this  crop  with  destruction'');  onion  smut;  pea  blight;  root  rot  of 
tobacco  (Thielavia  basicola,  ''As  a  conservative  estimate  it  is 
thought  that  this  single  disease  last  year  (1912)  cost  Wisconsin 
tobacco  growers  a  loss  of  approximately  $1,000,000");  black  rot 
of  tobacco.  This  showing  is  significant,  coming  as  it  does  from  a 
state  which  is  unusually  free  from  plant  and  animal  diseases. 
Mention  may  be  made  of  the  following  animal  diseases,  prevalent 
in  various  parts  of  the  United  States,  but  now  apparently  in  course 
of  extinction:  Glanders  in  horses,  tuberculosis  in  cattle;  cholera 
in  hogs.  In  the  year  1914  an  outbreak  of  the  foot-and-mouth 
disease  among  cattle  occurred  in  the  United  States,  entailing  a  loss 
of  millions  of  dollars. 

Effects  of  These  Factors. — The  above  list  of  pests  and  diseases 
contains  only  a  few  of  the  commoner  and  better  known  ones.  It 
is  evident,  however,  that  climatic  conditions,  pests  and  diseases 
are  factors  of  uncertainty  in  agriculture.  These  factors  affect 
both  the  quantity  and  quality  of  the  farmer's  output,  whether 
field  crop  or  livestock.  These  factors  therefore  render  coordination 
of  supply  and  demand  impossible.  There  must  inevitably  result 
from  these  great  fluctuations  in  supply  corresponding  fluctuations 
in  price.  Price  fluctuations  in  turn  create  a  class  of  risk  takers. 
The  farmers  themselves,  where  the  markets  are  narrow,  local,  and 
unorganized,  are  of  course  the  risk  takers,  and  take  both  the  gain 
and  the  losses  of  price  fluctuations.  In  the  great  staple  commodi- 
ties sold  on  the  world-market,  however,  where  the  organized  market 
is  the  rule,  a  distinct  class  of  risk  takers,  commonly  known  as 
speculators,  has  been  slowly  developed.  It  must  be  clearly  appar- 
ent to  every  person  giving  the  subject  any  thought  that  prices  do 
not  fluctuate  because  men  speculate,  but  that  men  speculate 
because  prices  fluctuate.  The  service  of  the  speculator  to  the 
farmer  and  the  trade  in  general  has  often  been  pointed  out  by  the 
Federal  Government.  For  instance,  the  report  of  Cotton  Ex- 
changes ^  makes  this  point  very  clear,  in  the  following  language : 

"Dealings  in  cotton  must  always  be  accompanied  by  risk,  either  to  the 
producer,  the  merchant  middleman,  the  speculator,  or  the  spinner.  Natural 
conditions  greatly  affect  the  supply,  and  other  conditions  the  demand,  and 
both  consequently  affect  the  price.  Whkt  is  the  equitable  distribution  of 
these  risks?  It  is  a  general  principle  that  much  of  the  risk  should  properly 
be  borne  by  the  speculative  class;  that  is,  by  those  who  neither  produce  nor 

^  Report  of  Bureau  of  Corporations  on  Cotton  Exchanges;  Part  1.  1908^ 
pp.  XVII-XVIII. 


20  ANARCHY  OF  AGRICULTURE 

spin  cotton,  but  who  are  interested  simply  in  making  a  profit  out  of  the  rise 
or  fall  of  its  price.  Whatever  justification  there  may  be  for  the  speculator 
hes  in  the  fact  that  he  stands  ready  to  take  a  large  share  of  the  risk.  His 
function  is  to  (1)  forecast  future  natural  conditions  affecting  supply  and  de- 
mand, (2)  to  obtain  as  accurate  information  thereon  as  possible,  (3)  to  make 
the  price  for  future  dehveries  based  on  such  information,  and  thus  (4)  to  dis- 
count in  advance  as  far  as  possible,  for  the  benefit  of  the  trade  in  general,  the 
effect  of  such  future  conditions  and  thereby  (5)  keep  prices  free  from  violent 
fluctuations  which  otherwise  would  occur  from  unforeseen  natural  causes." 

While  this  report  of  the  government  pertains  to  the  cotton 
industry,  it  holds  true  in  all  essential  respects  for  all  commodities 
on  the  various  exchanges.  And  it  makes  clear  the  very  significant 
fact  that  this  organized  speculation  lessens  price  fluctuations 
instead  of  increasing  such  fluctuations. 

This  same  report  quotes  with  approval  the  well-known  treatise 
of  Emery  on  the  Stock  and  Produce  Exchanges  of  the  United 
States,  especially  that  section  of  the  treatise  which  makes  the 
distinction  between  gambling  and  speculation.  The  objective 
economic  distinction  between  the  two,  says  Emery,  is  this:  gam- 
bUng  consists  in  placing  money  on  artificially  created  risks  of 
some  fortuitous  event.  Speculation  consists  in  assuming  inevitable 
economic  risks  of  changes  in  value.^ 

Yields  and  Prices. — By  means  of  insurance  farmers  are  able 
to  shift  certain  risks.  Crops  are  frequently  protected  by  hail 
insurance,  livestock  by  livestock  insurance.  There  still  remain, 
however,  inevitable  economic  risks  which  come  from  changes  in 
supply,  changes  in  demand,  and  changes  in  price.  A  farmer's 
prosperity  has  at  least  four  variable  factors  in  it  as  follows: 


1.  Good  crops  and  good  prices. 

2.  Poor  crops  and  good  prices. 

3.  Good  crops  and  poor  prices. 

4.  Poor  crops  and  poor  prices. 


The  relation  between  yields  and  prices  has  been  too  much 
neglected.  The  Experiment  Station  Record  ^  reviewing  a  work  in 
this  subject  contains  these  words:  ''The  author  criticizes  the  views 
which  he  states  are  generally  assumed  by  many  writers  and  speak- 
ers, that  large  yields  are  always  profitable  and  the  best  farmers 
are  those  who  raise  the  largest  crops;  that  large  yields  are  a  natural 
antidote  for  the  high  cost  of  living;  that  we  should  now  copy  the 

2  Emery,  Speculation  on  the  Stock  and  Produce  Exchanges  of  the  U.  S., 
p.  102. 

3  Experiment  Station  Record,  Feb.,  1915,  p.  191. 


SEASONAL  MARKETING  21 

intensive  methods  of  older  countries;  and  that  more  capital  is 
needed  for  the  best  results.  He  believes  that  it  is  relatively  safe 
to  invest  capital  freely  upon  the  farm  for  the  sake  of  correcting 
abnormal  conditions  and  raising  the  yield  to  the  normal,  but  that 
beyond  that  point,  because  of  the  law  of  diminishing  returns,  it 
will  pay  only  when  prices  rise." 

The  anarchy  of  agriculture  evidenced  by  frequent  overproduc- 
tion is  made  clear  by  an  address  of  C.  J.  Brand,  of  the  Bureau  of 
Markets  of  the  United  States  Department  of  Agriculture.^  The 
cantaloupe  trade  was  cited  by  Mr.  Brand  to  show  an  overdevelop- 
ment of  the  industry  due  to  ignorance  as  to  the  development  of  com- 
petitive areas,  which  in  1914  resulted  in  disaster  to  the  producers 
and  to  the  large  distributors.  Yet  the  consumers  failed  to  buy  at 
any  lower  prices.  ''As  usual,"  says  the  Record,  "the  slump  in 
prices  was  not  reflected  in  the  retail  trade,  consumers  pa3ang  prac- 
tically as  much  as  in  a  year  of  scarcity,  while  the  surplus  went  to 
the  dump."  The  conclusion  is  that  ''until  we  have  a  better  adjust- 
ment of  production  to  market  requirements,  this  problem  will 
continue  to  be  with  us."  Carl  Vrooman,  Assistant  Secretary  of 
Agriculture,  discussing  farm  problems  before  the  1914  Philadelphia 
meeting  of  the  American  Association  for  the  Advancement  of 
Science,  corrected  some  of  the  false  popular  impressions  as  to  the 
advantages  of  high  acre  yields.  He  showed  by  statistics  that  the 
largest  crops  do  not  necessarily  mean  the  largest  net  income  to 
the  farmer,  and  that  in  years  of  relatively  small  production  he 
often  realizes  quite  as  much  from  his  crops  as  in  years  of  maxi- 
mum yield. 

Seasonal  Marketing. — Another  point  of  great  significance  to 
the  farmer  must  be  noted,  and  that  is  the  seasonal  nature  of  his 
product.  His  chief  crops  are  produced  once  a  year.  Yet  the  crop 
is  consumed  every  day  in  the  year.  Since  the  crop  is  produced 
and  harvested  during  a  short  period,  and  consumed  during  the 
whole  year,  there  is  thereby  created  the  problem  of  storing,  pre- 
serving, and  financing  the  agricultural  product.  What,  if  anything, 
shall  the  farmers  themselves  do  about  it?  That  the  situation 
to-day  is  one  of  anarchy  was  strikingly  illustrated  by  one  speaker 
at  the  1915  Chicago  meeting  of  the  National  Conference  on  Mar- 
keting and  Farm  Credits.  R.  W.  Hockaday,  of  St.  Louis,  the 
General  Industrial  and  Agricultural  Agent  of  the  M.  K.  and  T. 
Ry.  Co.,  in  discussing  the  marketing  of  the  Southern  peach  crop, 

*  Experiment  Station  Record,  Feb.,  1915,  p.  106. 


22  ANARCHY  OF  AGRICULTURE 

stated  that  the  St.  Louis  market  could  absorb  twelve  cars  of 
peaches  per  day  and  no  more.  Yet,  on  one  occasion  a  Georgia 
shipper,  desiring  to  consign  peaches  to  St.  Louis,  took  the  precau- 
tion to  wire  Mr.  Hockaday  for  information  concerning  the  peaches 
billed  that  day  over  the  road  to  St.  Louis.  A  brief  examination 
disclosed  the  fact  that  seventy-five  cars  were  on  the  way  on  this 
one  road,  to  St.  Louis !  No  wonder  shippers  find  their  commission 
men  and  other  consignees  sometimes  paying  prices  less  than 
original  cost  of  production!  Where  does  the  blame  he?  And 
where  is  the  remedy?    Both  rest  largely  with  the  shippers. 

The  problem  of  marketing  and  the  problem  of  the  organized 
exchanges  must  be  discussed  in  later  chapters.  But  it  is  obvious 
that  in  some  specialized,  hmited  crop  areas  a  part  of  the  present 
anarchy  in  agriculture  can  be  removed  by  organized  production 
and  by  organized  marketing.  But  the  farmer  cannot  eliminate 
all  risks.  Much  speculation  in  the  products  of  the  farm  must 
ever  remain. 

QUESTIONS  ON  THE  TEXT 

1.  Show  the  significance  of  lack  of  coordination  of  supply  and  demand  in 

agriculture.    Cite  illustrations.    Compare  other  industries. 

2.  Show  why  coordination  of  supply  to  demand  is  difficult,  and  in  some  re- 

spects, impossible.    Show  clearly  the  factors  of  uncertainty. 

3.  Show  that  with  the  existing   "anarchy"  in  agriculture,   speculation  is 

rendered  inevitable. 

4.  Quote  the  Government  report  on  the  Cotton  Exchanges.    What  are  the 

five  functions  of  the  speculator? 

5.  Quote  Emery's  definitions  of  speculation  and  gambling. 

6.  Quote  Brand's  statement  about  cantaloupe  production  and  distribution. 

7.  Quote  Vrooman's  statement  about  the  "fallacy  of  large  yields." 

8.  Show  the  fundamental  necessities  back  of  storage  and  financing  of  farm 

crops. 

9.  Illustrate  how  market  gluts  arise.    Who  is  to  blame? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Define  anarchy.    Can  this  term  be  applied  to  agricultural  production  and 

distribution: 

2.  Distinguish  between  speculation  and  gambling. 

3.  Do  we  ever  have  overproduction  in  agriculture?    If  so,  who  gains  thereby? 

Who  suffers? 

4.  Would  the  farmer  gain  by  combining  and  producing  smaller  crops?    Dis- 

tinguish between  individual  and  social  welfare. 

5.  Have  vou  any  suggestions  to  make  concerning  the  improvement  of  present 

methods  of  stormg  and  financing  farm  crops  from  harvest  time  to  con- 
sumption time? 

6.  To  what  extent  ought  farmers  to  enter  the  fields  of  storing,  conditioning, 

and  financing  their  crops,  and  to  what  extent  ought  speciahsts  (middle- 
men) perform  these  functions?  Ought  a  farmer  to  speciahze  exclusively 
in  farming? 


REFERENCES  23 

REFERENCES 

1.  For  statistics  of  agricultural  production  see  Yearbook  of  the  Depart- 
ment of  Agriculture. 

2.  For  statistics  of  the  movement  of  grain  crops  to  market  see  the  annual 
reports  of  the  Secretaries  of  the  important  exchanges,  especially  the  following: 
Winnipeg,  The  Grain  Exchange;  Duluth,  The  Board  of  Trade;  Minneapolis, 
The  Chamber  of  Commerce;  Chicago,  The  Board  of  Trade;  Kansas  City, 
The  Board  of  Trade;  St.  Louis,  The  Merchants  Exchange. 

3.  For  abstracts  from  the  reports  issued  by  the  Experiment  Stations  of 
the  United  States,  and  from  other  agricultural  hterature,  consult  the  ''Experi- 
ment Station  Record,"  pubhshed  by  the  Department  of  Agriculture, 
Washington. 

4.  Weld,  L.  D.  H.:    "The  Marketing  of  Farm  Crops." 

Maladies  Affecting  Animals. 

In  the  Secretary  of  Agriculture's  Annual  Report  for  1915  he  estimates  the 
loss  for  the  year  as  follows : 

Hog  cholera $  75,000,000 

Texas  fever  and  cattle  ticks 40,000,000 

Tuberculosis 25,000,000 

Contagious  abortion 20,000,000 

Blackleg 6,000,000 

Anthrax 1,500,000 

•                 Scabies  of  sheep  and  cattle 4,600,000 

Glanders 5,000,000 

Other  livestock  diseases 22,000,000 

Parasites 5,000,000 

Poultry  diseases 8,750,000 

$212,850,000 


CHAPTER  III 

FARMING  VERSUS  LAND  SPECULATION 

As  already  mentioned  in  the  preceding  pages,  only  half  the 
land  in  the  United  States  is  now  in  farms;  only  half  the  land  in 
farms  is  "improved";  and  this  improved  land,  according  to  some 
critics,  is  not  well  farmed.  It  has  also  been  shown  in  a  preceding 
paragraph  that  farm  land  is  passing  out  of  the  hands  of  the  dwellers 
on  the  land,  and,  unless  the  tendency  of  the  past  forty  years  is 
broken,  the  time  is  not  far  distant  when  the  land  will  practically  all 
be  farmed  by  tenant  farmers  or  hired  labor  and  not  by  the  owner. 

The  criticism  is  also  heard  with  increasing  frequency  that  the 
farmer  is  one-third  farmer  and  two-thirds  speculator.  This  criti- 
cism is  based  on  the  fact  that  a  part  of  the  farmers  aim  to  make 
their  profits  and  do  make  their  profits  by  selling  their  land,  not 
by  farming  it.  Many  farmers  frankly  admit  that  were  it  not  for 
this  speculative  gain  their  years  of  toil  would  show  no  balance  to 
their  credit.  Indeed,  the  Assistant  Secretary  of  Agriculture  has 
stated  that  "the  average  farmer  is  only  making  wages;  he  is  not 
making  a  profit  over  his  wages  and  the  interest  on  his  investment."^ 
As  long  as  farmers  own  the  land,  the  American  people  will  doubt- 
less be  content  to  see  the  farmer  receive  as  a  reward  for  his  years 
of  toil  this  speculative  gain  coming  from  increase  in  land  value. 
But  when  the  land  passes  from  the  hands  of  the  men  who  farm  it, 
the  question  of  "overcapitalized  land"  will  doubtless  become  an 
insistent  one,  and  one  raised  by  the  farmers  themselves. 

Overcapitalized  Land. — The  agitation  among  farmers  which 
led  to  the  "granger  laws"  for  state  regulation  of  railroads  was 
based  on  harassing  conditions:  rates  were  unsatisfactory  and 
discriminatory;  railroads,  especially  of  the  western  and  Pacific 
States,  were  greatly  overcapitalized.  Perhaps  overcapitalization, 
or  "watered  stock"  as  it  was  called,  was  the  most  loudly  denounced 
of  the  evils.  Briefly,  the  farmer  considered  it  wrong  that  a  road 
costing  twenty-five  thousand  dollars  a  mile  should  be  capitalized 
at  forty  or  fifty  thousand  a  mile.  Applying  this  same  logic  to  land 
now  that  was  applied  to  railroads  forty  years  ago,  it  may  be  an 
evil  to  capitalize  land  costing  $25.00  an  acre  at  $50.00  an  acre — 
an  evil  to  the  farmer  and  to  the  general  public. 

1  Experiment  Station  Record.  Feb.  1915,  p.  105. 
24 


OVERCAPITALIZED  LAND  25 

The  following  case  of  C.  L.  Smith — a  true  story — is  typical  of 
many  transactions  in  country  real  estate  which  are  now  being 
made  every  day  throughout  the  entire  United  States.  In  the 
year  1907  C.  L.  Smith,  a  renter  on  an  Illinois  farm,  decided  to 
move  westward  and  buy  land  in  North  Dakota.  The  lUinois  land 
at  this  time,  of  good  farming  quality,  was  selling  for  $150  an  acre, 
whereas  the  Dakota  land,  of  equal  fertility,  was  selling  at  one- 
third  or  one-fourth,  or  even  one-fifth  that  amount.  It  should  be 
added  also,  that  much  Dakota  land  of  an  inferior  grade  was  on 
the  market  at  prices  ranging  from  $10.00  to  $40.00  an  acre.  Mr. 
Smith,  upon  his  arrival  in  North  Dakota,  was  taken  in  charge  by 
certain  real  estate  agents.  These  agents  had  arranged  for  the 
conditional  purchase  of  a  farm  of  six  hundred  and  forty  acres  at 
$20.00  an  acre.  This  farm  the  agents  then  sold  to  Mr.  Smith  at 
$31.50  an  acre,  and  Mr.  Smith,  thinking  of  the  one-hundred-and- 
fifty-doUar  land,  considered  himself  the  discoverer  of  a  bargain. 
He  had  been  deceived,  however,  as  later  developments  proved. 
This  land,  in  common  with  other  land  in  this  community,  was 
considered  by  the  actual  owners  to  be  worth  about  $20.00  an  acre. 
Allowing  the  agent  the  commission  of  $1.50  an  acre  (a  $960  com- 
mission), Mr.  Smith  should  have  paid  $21.50  an  acre.  Instead  of 
that,  he  paid  $31.50,  or  $10.00  an  acre  too  much,  a  total  excess  of 
$6400  on  the  section.  The  agents  on  an  investment  of  $12,800 
made  a  profit  of  $7360,  or  a  net  profit  of  57  per  cent.  Mr. 
Smith  paid  $4000  in  cash  when  he  bought  the  farm,  and  gave 
a  mortgage  on  the  farm  for  the  balance.  The  farm  had  been 
grossly  overcapitalized.  It  was  consequently  impossible  to  carry 
the  load.  This  meant  one  of  three  possible  courses:  (1)  submit 
to  foreclosure  proceedings,  and  lose  the  land  and  much  of  what 
had  been  invested  in  it.  This  frequently  happens.  (2)  Renew  the 
loan,  thus  shouldering  the  same  burden  for  another  period  of 
years  with  no  more  hope  of  ultimate  success.  (3)  Find  a  new  buyer, 
ignorant  of  conditions  (commonly  spoken  of  as  a  '' sucker")  and 
sell  the  land  to  him  at  $50.00  or  $60.00  an  acre.  This  course  would 
permit  Mr.  Smith  to  recoup  his  losses  and  retire  with  a  profit. 
The  mortgage  was  foreclosed  before  it  was  due,  and  Mr.  Smith 
estimated  his  net  loss  on  the  deal  as  $5,000.  When  asked  to  suggest 
some  remedy  for  this  system  of  merchandising  land,  Mr.  Smith 
wrote,  in  language  more  forceful  than  grammatical,  as  follows: 

"  I  had  enough  to  pay  for  one  hundred  and  sixty  acres.  That  is  what  is 
hurting  this  county,  because  some  of  the  agents  are  fleecing  the  men  that 
come  here  with  a  httle  money.    They  overload  them  with  land  and  when  the 


26  FARMING  VERSUS  LAND  SPECULATION 

pinch  comes  they  lose  all.  I  am  not  the  only  man  that  has  lost  all  through 
them  around  here.  If  they  would  charge  $L50  an  acre  for  selHng,  we  could 
stand  that  all  right.  And  this  county  would  boom  if  the  ones  that  have  come 
here  could  make  a  success  of  it,  and  we  could  if  we  were  told  the  truth  before 
we  came  here." 

The  process  of  ''unloading"  land  onto  the  inadequately  in- 
formed buyer  is  a  practice  which  has  assumed  immense  proportions 
in  late  years.  The  tiniest  village  now  can  boast  of  its  "Real  Estate 
Offices/'  with  one  or  more  men  giving  their  whole  time  to 'this  form 
of  trading,  whereas,  a  few  years  ago  the  marketing  of  agricultural 
lands  was  largely  incidental  to  other  businesses  or  was  done  by 
private  agreements.  Apparently  the  only  check  to  this  form  of 
speculation  and  value-inflation  (since  there  is  ordinarily  no  organ- 
ized Real  Estate  Exchange  in  the  farm  community)  is  the  cycle 
of  financial  panics  which  visits  the  United  States.  In  panic  years, 
if  the  panic  be  a  severe  one,  much  liquidation  in  real  estate  takes 
place.  This  entails  fearful  losses  on  the  land  speculators,  including 
farmer  speculators.  A  good  illustration  of  this  was  seen  in  Western 
Canada  in  1913  and  1914,  when  the  banks  ceased  to  finance  land 
trading.  This  was  followed  by  a  serious  slump  in  land  values,  and 
a  general  depression  involving  the  usual  feature  of  heavy  liquida- 
tions and  business  failures. 

That  real  estate  values  are  subject  to  wide  fluctuations,  and 
hence  offer  great  opportunities  for  speculative  gains,  is  strikingly 
illustrated  by  the  Report  of  Senator  Peffer,  on  ''Agricultural 
Depression,  Causes  and  Remedies,"  submitted  to  the  Senate  Com- 
mittee on  Agriculture  and  Forestry,  February  15,  1894.  This 
year  was  a  time  of  low  prices,  but  was  both  preceded  and  followed 
by  a  period  of  high  prices.  And  this  is  true  of  every  period  of 
low  prices.  The  following  quotations  from  this  report  show  the 
widespread  depression  in  farm  land  values: 

"In  Illinois  improved  lands  fell  from  $20.81  in  1873  to  $11.18  in  1892." 

"In  Nebraska  improved  lands  fell  from  $4.60  to  $3.72,  more  than  twenty 
per  cent  since  1885." 

"  In  Kansas  land  was  about  fifteen  per  cent  lower  in  1892  than  it  was  in 
1874  or  1884." 

"  In  the  New  England  states  lands  used  for  agricultural  purposes  are  not 
valued  as  high  as  they  were  in  1875  by  thirty  per  cent." 

"There  are  many  local  influences  which  affect  prices,  and  it  is  only  by 
averages  that  we  can  approximate  the  general  truth  in  regard  to  the  matter. 
When  men  who  own  land  are  out  of  debt  and  do  not  want  to  sell,  they  hold 
their  land  as  high  as  they  ever  did;  while,  on  the  other  hand,  when  the  owner 
is  in  debt  or  wants  to  sell,  he  does  not  strenuously  hold  up  the  price.  From 
the  best  sources  of  information  accessible,  the  committee  are  of  the  opinion 
that  the  prices  at  which  farm  lands  in  the  older  states  could  have  been  sold 
during  the  last  five  years  is  at  least  twenty-five  per  cent  below  the  level  of 


A  RISE  IN  SELLING  PRICE  27 

fifteen  or  twenty  years  ago.  And  if  we  are  guided  by  the  reports  of  land  sales 
in  foreclosure  proceedings,  the  depreciation  has  been  more  than  fifty  per  cent. 
In  three  hundred  and  eighty-three  cases  in  six  counties  in  one  state  the  lands 
sold  for  but  twenty-five  per  cent  of  the  debt,  and  the  debt  was  only  one-third 
the  estimated  value  of  the  land  when  the  debt  was  incurred." 

Investigating  Agricultural  Conditions. — Four  years  after  this 
date — another  cycle  of  prosperity  having  failed  to  develop — Con- 
gress passed  an  act  (June  18,  1898)  creating  the  Industrial  Com- 
mission with  powers  to  investigate  and  report  on  agricultural  and 
other  conditions.  Volume  X  of  the  Industrial  Commission's 
Report  issued  in  1901  contains  these  statements  concerning  farm 
land  prices: 

"The  prices  of  agricultural  land  in  the  Eastern  States  have  generally 
fallen,  in  some  cases  to  about  fifty  per  cent  of  the  figures  asked  during  the  time 
of  high  prices.  There  is  said  to  have  been  also  a  general  dechne  in  the  price  of 
land  along  the  Mississippi  river.  Figures  given  for  Pennsylvania  show  an 
increase  in  the  average  price  of  farm  lands  between  1859  and  1879  (the  high 
prices  preceding  the  latter  year  being  explained  by  the  inflated  currency), 
but  a  drop  by  1889  to  a  lower  price  than  that  of  thirty  years  previous  .  .  . 
About  1890,  California  lands  showed  the  effect  of  the  high  prices  of  fruit  in 
an  increase  of  values  which  could  scarcely  be  expected  to  be  permanent.  Land 
can  now  be  obtained  at  about  one-third,  or  even  less,  of  the  prices  prevaUing 
at  that  time." 

This  decline  in  farm  values  may  be  the  best  thing,  after  all, 
considering  the  question  from  the  standpoint  of  proper  capital- 
ization versus  overcapitalization.  For,  as  L.  H.  Bailey  testifies, 
''valuation  of  farm  properties  have  decreased.  It  is  therefore 
apparent,  if  prices  have  not  depreciated,  that  the  income  from 
investment  in  farm  lands  to-day  is  relatively  greater  than  a  gen- 
eration ago.  When  farm  values  are  low  it  is  the  time  to  purchase 
farms  if  one  desires  to  make  a  living  from  the  proceeds.  In  this 
view,  therefore,  the  decUne  in  farm  values  promises  well  for  the 
earning  power  of  farming." 

Professor  Bailey,  however,  is  led  into  error  in  his  conclusions 
concerning  the  permanence  of  low  values.  He  says,  "It  has  been 
a  fault  with  farmers,  perhaps,  that  they  have  considered  the 
changes  in  farm  values  to  be  merely  temporary,  and  they  have 
therefore  been  free  to  contract  debts  hoping  that  the  status  would 
quickly  regain  itself.  The  fact  seems  to  be,  however,  that  the 
decline  in  farm  values  is  general  and  relatively  permanent." 

A  Rise  m  Selling  Price. — Yet  the  value  of  farm  land  increased 
in  the  ten-year  period,  1900-1910,  by  one  hundred  and  eighteen 
per  cent!  Since  the  land  in  farms  increased  during  this  period  by 
only  four  and  eight-tenths  per  cent,  it  is  evident  that  this  enormous 
increase  in  land  value  is  due  almost  wholly  to  a  rise  in  the  selling 


28  FARMING  VERSUS  LAND  SPECULATION 

price  of  land.  In  short,  the  average  value  of  land  per  acre  rose 
from  $15.57  in  1900  to  $32.40  in  1910,  or  one  hundred  and  eight 
per  cent.  In  one  decade,  therefore,  the  value  of  the  farm  land  in 
the  United  States  was  more  than  doubled.  Obviously  the  real 
estate  market  in  its  present  unorganized  condition  offers  oppor- 
tunity for  speculative  gains  rivalling  and  even  exceeding  those  of 
the  stock  exchange  or  other  organized  exchanges.  Is  the  farmer 
the  beneficiary  or  the  victim  of  high-priced  land  and  of  land  spec- 
ulation? The  farmer  who  depends  for  a  living  on  the  proceeds  of 
his  farming  is  clearly  the  victim,  since  it  is  rapidly  becoming 
more  difficult  to  become  a  land  owner.  An  increase  in  the  number 
of  mortgages  accompanied  by  a  decrease  in  tenancy  would  show 
a  healthy  movement  of  renters  becoming  owners.  But  such  a 
movement  is  lacking.  On  the  other  hand,  an  increase  in  mort- 
gages, accompanied  by  an  increase  of  tenancy,  shows  an  unmis- 
takable movement  of  land  ownership  out  of  the  hands  of  the 
farmers  into  the  hands  of  absentee  landlords.  This  movement  is 
unhappily  upon  us. 

Commercial  Value  vs.  Market  Value. — The  selling  price  of  the 
products  of  the  land  determine  the  commercial  value  of  the  land. 
When  land  sells  for  a  price  in  excess  of  this  value  it  has  a  market 
value  out  of  line  with  its  commercial  value  and  may  be  said 
to  be  overcapitalized.  This  situation  often  exists,  and  may 
be  due  to  various  causes.  But  whatever  the  cause,  the  results 
are  bad  for  the  would-be  land-owning  farmer.  Edwin  A.  Pratt 
in  his  book  on  ''The  Transition  in  Agriculture,"  gives  us  a  strik- 
ing statement  of  the  case  from  his  own  observation  in  England. 
Says  Pratt: 

**  Looking  in  the  first  place  at  the  price  which  the  would-be  peasant 
proprietor  must  pay  for  his  land  independently  of  legal  charges,  it  is  certain 
that  the  Enghsh  agriculturist  who  desires  to  purchase  a  small  holding  in  the 
open  market  labors  under  special  disadvantages.  It  is  not  alone  that  he  has 
to  compete  with  a  number  of  others  possessed  of  similar  aspirations,  but  various 
causes  have  combined  to  give  to  much  of  the  land  in  this  country — more, 
perhaps  than  in  any  other  country — a  market  value  which  is  in  excess  of  its 
commercial  value — that  is  to  say,  its  value  when  it  is  wanted  for  the  production 
of  commodities  for  sale.  This  is  especially  the  case  in  regard  to  land  which 
might  be  utihzed  for  residential  purposes  for  the  sake  of  the  social  advantages 
afforded  by  the  ownership  of  an  estate  or  in  the  interests  of  sport.  Not  only 
do  established  country  families  seek  to  increase  their  properties,  for  one 
reason  or  another,  by  incorporating  therein  any  bit  of  freehold  they  can  secure 
in  the  immediate  neighborhood,  but  the  market  value  may  be  kept  above  the 
commercial  value  by  reason  of  the  fact  that  every  Englishman,  more  or  less, 
who  has  prospered,  thinks  it  incumbent  on  him  to  set  up  his  'place'  in  the 
country,  if  he  should  not  have  one  already.  In  either  case  a  higher  price 
would  be  forthcoming  than  could  be  afforded  by  a  cultivator  who  desired  the 
land  as  a  means  of  obtaining  a  hving  thereon.    Still  more  do  these  considera- 


OVERCAPITALIZED  LAND  BAD  THING  29 

tions  apply  in  the  neighborhood  of  a  town  or  of  a  village  not  too  far  from  a 
railway  station — that  is  to  say,  in  precisely  those  localities  which  the  small 
holder  who  wanted  to  start  market  gardening,  or  some  other  such  business, 
would  find  the  most  desirable  for  his  purpose.  Here  he  might  have  to  compete 
with  the  retired  professional  man,  merchant,  or  tradesman,  who,  though 
unable  to  buy  a  large  estate,  wished  for  a  'bit  of  land,'  which  he  could  either 
build  on  or,  at  least,  feel  a  pride  in  owning,  and  for  which  he  is  not  disposed 
to  look  too  closely  at  the  price,  assuming  he  finds  what  suits  his  fancy.  So 
to  begin  with,  the  would-be  small  owner,  standing  as  a  sohtary  unit  might 
agree  to  buy  land  at  a  higher  price  than  he  ought  to  pay — from  a  commercial 
standpoint — even  if  he  had  the  money.  But  he  has  not  got  the  money.  He 
possesses  a  certain  sum,  and  this  the  seller  of  the  land  agrees  to  accept,  the 
remainder  being  left  on  mortgage." 

This  situation  leads  Pratt  to  the  conclusion  that  tenancy  at  a 
fair  rent  is  better  than  ownership  at  an  overcapitalized  valuation. 
His  words  are:  "Looking  at  the  matter  from  the  point  of  view  of 
first  principles,  I  should  say  the  purchase — provided  tenancy  on 
satisfactory  lines  can  be  secured  instead — is  the  more  undesirable 
because  the  small  holder  should  be  able  to  do  better  with  his 
money.  Farming  as  a  business  must  be  run  on  business  lines,  and 
there  ought  to  be  greater  profit  from  capital  placed  in  a  business, 
with  the  possibilities  of  a  more  or  less  frequent  turn-over,  than 
from  capital  locked  up  in  land  that  is  wanted  for  cultivation, 
especially  in  land  bought  at,  as  I  have  said,  more  than  its  commer- 
cial valuation." 

Overcapitalized  land  is  a  bad  thing  for  the  farmers  themselves, 
as  the  foregoing  discussion  indicates.  It  is  likewise  a  bad  thing 
for  the  wage-earning  class.  The  outstanding  economic  fact  in  our 
past  history  has  been  the  abundance  of  cheap,  fertile  land.  And 
this  ''free"  land — as  long  as  it  lasted — was  the  one  great  force 
tending  to  maintain  the  high  rate  of  American  wages.  Truly  did 
Winthrop  sense  the  situation  when  he  wrote  in  1645:  ''Our  chil- 
dren's children  will  hardly  see  this  great  continent  filled  with 
people,  so  that  our  servants  will  still  desire  freedom  to  plant  for 
themselves,  and  not  stay  but  for  verie  great  wages."  In  a  similar 
vein  wrote  a  royal  official  of  New  York  in  1723:  "North  America 
containing  a  vast  tract  of  land,  everyone  is  able  to  procure  a  piece 
of  land  at  an  inconsiderable  rate,  and  therefore  is  fond  to  set  up 
for  himself  rather  than  work  for  hire.  This  makes  labor  continue 
very  dear  ..." 

Earnings  from  "watered-stock"  and  earnings  from  the  "un- 
earned increment"  in  land  value  are  in  essence  the  same,  and  are 
indeed  twin  evils.  Each  man  ought  to  reap  where  he  sows  and 
what  he  sows,  and  no  more.  How  much  profit,  then,  is  the  farmer 
entitled  to?    A  fair  answer  to  this  question  is  contained  in  the 


? 


30  FARMING  VERSUS  LAND  SPECULATION 

federal  government's  ''Weekly  News  Letter  to  Crop  Correspond- 
ents," in  these  words:  ^ 

"The  county  agent  is  a  part  of  a  great  agricultural  movement.  This 
movement  has  for  its  ultimate  purpose  the  building  up  of  a  country  life  that 
shall  be  wholesome,  attractive,  cultured,  efficient  and  profitable.  There  are 
many  sectioiis  of  our  country  to-day  that  have  one  or  more  of  these  conditions, 
but  the  sections  where  aU  are  found  in  happy  unison  are  comparatively  few. 
The  desire  of  those  who  are  thinking  on  rural  problems  is  that  rural  communi- 
ties everywhere  shall  be  wholesome,  attractive,  and  cultured,  and  that  each 
individual  shall  receive  a  fair  reward  for  the  labor  done  and  the  capital  in- 
vested. In  proportion  as  agriculture  is  made  profitable  will  the  community 
become  attractive,  cultured,  and  a  place  wholesome  and  desirable  to  live  in. 

"Just  what  is  meant  by  a  profitable  agriculture?  Simply  this:  There 
shall  be  a  reasonable  return  on  the  capital  invested  in  farming  and  a  reasonable 
return  for  the  farmer's  labor  and  managerial  abihty.  A  farmer,  like  any  other 
man  in  any  other  business,  is  entitled  to  just  what  he  earns  and  no  more;  but 
what  he  earns  should  be  sufficient  to  give  him  and  his  family  some  of  the 
more  essential  conveniences  of  modern  life,  time  for  study,  some  recreation, 
and  opportunity  for  education  of  his  children.  With  some  money  in  his 
pocket  the  farmer  wiU  support  the  church,  place  conveniences  in  his  house, 
magazines  and  Hterature  on  the  sitting-room  table,  and  send  his  children  to 
the  best  schools  with  very  httle  outside  prompting." 

QUESTIONS  ON  THE  TEXT 

1.  Distinguish  between  land  farming  and  land  speculation. 

2.  Distinguish  between  fa^-mer  and  land  owner. 

3.  Quote  Vrooman  on  the  farmer's  average  income. 

4.  Define  and  illustrate  overcapitaHzed  land. 

5.  Cite  the  case  of  Mr.  C.  L.  Smith. 

6.  Give  examples  of  fluctuations  in  land  value. 

7.  Quote  Bailey  on  land  values. 

8.  Distinguish  between  commercial  and  market  values. 

9.  State  and  explain  Pratt's  position  as  to  ownership  versus  tenancy. 
10.  Show  the  interest  of  the  wage  earner  in  cheap  land. 

11    What  profits,  according  to  the  Government  Weekly  News  Letter,  is  a 
farmer  entitled  to? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Ought  the  land  owner  to  have  the  "unearned  increment,"  so-called,  on 

his  land? 

2.  Is  free  trade  in  land  the  ideal  method  of  land  trading? 

3.  Is  it  for  the  pubhc  welfare  to  have  cheap  land  or  dear  land?    Reasons  for 

your  answer. 

REFERENCES 

1.  Pratt,  E.  A.:    "The  Transition  in  Agriculture." 

2.  For  a  statement  of  the  Single  Tax  view  of  the  "unearned  increment," 
see  "Progress  and  Poverty,"  by  Henry  George;  also,  "The  case  for  Land 
Nationalization,"  by  Joseph  Hyder. 

3.  Whittaker,  Sir  Thomas  :  "Ownership,  Tenure,  and  Taxation  of  Land." 

4.  BoGART,  E.  L.:  "Economic  History  of  the  United  States,"  229-235; 
247-249;  286-299. 

5.  CoMAN,  Katherine:  "Industrial  History  of  the  United  States," 
285-307. 

6.  Marshall,  Wright,  Field:  "Materials  for  the  Study  of  Elementary 
Economics,"  635-640. 

2  December  16,  1914,  p.  4. 


CHAPTER  IV,  _.;  i^'^ 

THE  "  BACK  TO  THE  LAND  "  MOVEMENT 

An  ideal  held  by  a  great  many  people  in  this  Republic  is  a 
sturdy  and  substantial  class  of  farmers,  owning  and  tilhng  their 
own  small  farms.  The  farm  is  pictured  in  song  and  story  as  the 
true  home  of  health  and  happiness  as  well  as  the  very  foundation 
of  wealth  and  independence.  Doubtless  many  of  our  forefathers 
shared  the  opinions  of  Jefferson  when  he  fondly  looked  upon 
agrarian  democracy  as  the  goal  of  the  new  Republic;  when  he 
considered  a  large  wage-earning  class  as  well  as  a  large  commercial 
class  (depending  upon  the  ''casualties  and  caprices  of  customers") 
as  full  of  danger,  corruption  and  subservience.  To  use  Jefferson's 
own  words:  ''Generally  speaking,  the  proportion  which  the  aggre- 
gate of  other  classes  of  citizens  bears  in  any  state  to  that  of  its 
husbandmen,  is  in  the  proportion  of  its  unsound  to  its  healthy 
parts  and  is  a  good  enough  barometer  whereby  to  measure  its 
degree  of  corruption."  As  to  a  wage-earning  class:  "Let  our 
workshops  remain  in  Europe  .  .  .  The  mobs  of  the  great  cities 
add  just  so  much  to  the  support  of  pure  government  as  sores  do 
to  the  human  body  ...  I  consider  the  class  of  artificers  as 
panderers  of  vice,  and  the  instruments  by  which  the  liberties  of  a 
country  are  generally  overturned."  What  would  be  Jefferson's 
opinion  of  his  country  to-day?  Just  after  our  Civil  War  the  slogan, 
''Forty  Acres  and  a  Mule,"  was  taken  up  by  the  people  of  the 
North  and  the  carpet-bagger  of  the  South,  as  the  ideal  solution 
of  the  negro  problem  in  its  economic  aspects. 

To-day  from  press  and  pulpit,  from  publicists  and  legislators, 
comes  the  cry,  "Back  to  the  Land."  Now  that  seventy  million 
of  our  people  live  in  villages  and  cities,  and  only  thirty  million 
live  in  the  open  country,  the  problem  of  the  "small  farm,"  of  the 
"closer  settlement"  is  becoming  a  very  interesting  one.  The  cry 
is,  "Back  to  the  Land."  The  drift  is  away  from  the  land.  The 
situation  is  perplexing.  What  should  be  the  attitude  of  the  honest 
patriot  towards  this  condition?  What  have  other  peoples  in  other 
lands  found  out  about  this  question  of  the  small  farm? 

The  question  of  the  big  farm  versus  the  small  farm  was  a 
very  hotly  debated  question  in  England  three-fourths  of  a  century 
ago.     Good  farming  must  perish  with  the  breaking  up  of  large 

31 


32       THE  "BACK  TO  THE  LAND"  MOVEMENT 

farms,  contended  one  side;  not  so,  replied  the  other  side.  One 
British  writer,  a  friend  of  the  small  farm  owner,  stated  the  matter 
concretely  as  follows:  '^Our  agricultural  writers  tell  us,  indeed, 
that  laborers  in  agriculture  are  much  better  off  as  farm  servants 
than  they  would  be  as  small  proprietors.  We  have  only  the  mas- 
ter's word  for  this.  Ask  the  servant.  The  colonists  told  us  the 
same  thing  of  their  slaves.  If  property  is  a  good  and  desirable 
thing,  I  suspect  the  smallest  quantity  of  it  is  good  and  desirable; 
and  that  state  of  society  in  which  it  is  most  widely  diffused  is  the 
best  constituted." 

Norway  is  cited  as  an  example  where  peasant  proprietors  are 
of  oldest  date  and  most  numerous  in  proportion  to  population, 
and  where  as  a  consequence  social  and  economic  conditions  are 
of  the  best.  Concerning  the  effects  of  peasant  proprietorship  on 
the  continent,  the  same  writer  goes  on  to  say :  ^ 

"If  we  listen  to  the  large  farmer,  the  scientific  agriculturist,  the  political 
economist,  good  farming  must  perish  with  large  farms;  the  very  idea  that 
good  farming  can  exist  unless  on  large  farms  cultivated  with  great  capital, 
they  hold  to  be  absurd.  Draining,  manuring,  economical  arrangement,  clean- 
ing the  land,  regular  rotations,  valuable  stock  and  implements,  all  belong 
exclusively  to  large  farms,  worked  by  large  capital,  and  by  hired  labor.  This 
reads  very  well;  but  if  we  raise  our  eyes  from  their  books  to  their  fields,  and 
cooUy  compare  what  we  see  in  the  best  districts  farmed  in  large  farms  with 
what  we  see  in  the  best  districts  farmed  in  small  farms,  we  see,  and  there  is  no 
blinking  the  fact,  better  crops  on  the  ground  in  Flanders,  East  Friesland, 
Holstein,  in  short,  on  the  whole  Une  of  the  arable  land  of  equal  quahty  on  the 
continent  from  the  Sound  to  Calais,  than  we  see  on  the  hne  of  the  British 
coast  opposite  to  this  line,  and  in  the  same  latitudes,  from  the  Firth  of  Forth 
aU  round  to  Dover.  Minute  labor  on  small  portions  of  arable  ground  gives 
evidently,  in  equal  soils  and  climate,  a  superior  productiveness,  where  these 
small  portions  belong  in  property,  as  in  Flanders,  Holland,  Friesland,  and 
Ditmarsch  in  Holstein,  to  the  farmer.  It  is  not  pretended  by  our  agricultural 
writers,  that  our  large  farmers,  even  in  Berwickshire,  Roxburghshire,  or  the 
Lothians  approach  to  the  garden-like  cultivation,  attention  to  manures, 
drainage,  and  clean  state  of  the  land,  or  in  productiveness  from  a  small  space 
of  soil  not  originally  rich,  which  distinguish  the  small  farmers  of  Flanders, 
or  their  system.  In  the  best-farmed  parish  in  Scotland  or  England,  more  land 
is  wasted  in  the  corners  and  borders  of  the  fields  of  large  farms,  in  the  roads 
through  them,  unnecessarily  wide  because  they  are  bad,  and  bad  because  they 
are  wide,  in  neglected  commons,  waste  spots,  useless  belts  and  clumps  of  sorry 
trees,  and  such  unproductive  areas,  than  would  maintain  the  poor  of  the  parish, 
if  they  were  all  laid  together  and  cultivated.  But  large  capital  applied  to 
farming  is  of  course  only  apphed  to  the  very  best  soils  of  a  country.  It  cannot 
touch  the  small  unproductive  spots  which  require  more  time  and  labor  to 
fertilize  them  than  is  consistent  with  a  quick  return  of  capital.  But  although 
hired  time  and  labor  cannot  be  apphed  beneficially  to  such  cultivation,  the 
owner's  time  and  labor  may.  He  is  working  for  no  higher  returns  at  first  from 
his  land  than  a  bare  living.  But  in  the  course  of  generations  fertihty  and  value 
are  produced;  a  better  living,  and  even  very  improved  processes  of  husbandry, 

^  Laing,  Notes  of  a  Traveler,  p.  299  et  seq. 


IN  FRANCE  33 

are  attained.  Furrow  draining,  stall  feeding  all  summer,  liquid  manures,  are 
universal  in  the  husbandry  of  the  small  farms  of  Flanders,  Lombardy,  Switzer- 
land. Our  most  improving  districts  under  large  farms  are  but  beginning  to 
adopt  them.  Dairy  husbandry,  even,  and  the  manufacture  of  the  largest 
cheeses  by  the  cooperation  of  many  small  farmers,  the  mutual  assurance  of 
property  against  fire  and  hail  storms,  by  the  cooperation  of  small  farmers — 
the  most  scientific  and  expensive  of  all  agricultural  operations  in  modern  times, 
the  manufacture  of  beet  sugar — the  supply  of  the  European  markets  with  flax 
and  hemp,  by  the  husbandry  of  small  farmers — the  abundance  of  legumes, 
fruits,  poultry,  in  the  usual  diet  even  of  the  lowest  classes  abroad,  and  the 
total  want  of  such  variety  at  the  tables  even  of  our  middle  classes,  and  this 
variety  and  abundance  essentially  connected  with  the  husbandry  of  small 
farmers — all  these  are  features  in  the  occupation  of  a  country  by  small  pro- 
prietor-farmers, which  must  make  the  inquirer  pause  before  he  admits  the 
dogma  of  our  land  doctors  at  home,  that  large  farms  worked  by  hired  labor 
and  great  capital  can  alone  bring  out  the  greatest  productiveness  of  the  soil, 
and  furnish  the  greatest  supply  of  the  necessaries  and  conveniences  of  life  to 
the  inhabitants  of  a  country," 

In  France. — The  British  writer  of  over  a  century  ago  who  was 
the  warmest  advocate  of  large  farms,  Arthur  Young,  traveled 
over  nearly  the  whole  of  France.  Even  at  that  day  France  was 
known  as  the  land  of  small  farms,  due  to  the  repeated  subdivisions 
of  the  land.  Yet  inveterate  enemy  of  small  farms  as  Young  was, 
he  found  remarkable  evidence  of  excellent  cultivation  in  the  little 
fields  of  France  in  the  years  1787,  1788  and  1789.  In  his  "Travels 
in  France"  we  read,  for  instance,  the  following: 

''Walk  to  Rossendal,  where  M.  le  Brun  has  an  improvement  on  the  Dunes, 
which  he  very  obHgingly  showed  me.  Between  the  town  and  that  place  is  a 
great  number  of  neat  httle  houses,  built  each  with  its  garden,  and  one  or  two 
fields  enclosed,  of  most  wretched  blowing  dune  sand,  naturally  as  white  as 
snow,  but  unproved  by  industry.  The  magic  of  property  turns  sand  to  gold. 
.  .  .  From  Gauge,  to  the  mountain  of  rough  ground  which  I  crossed,  the  ride 
has  been  the  most  interesting  which  I  have  taken  in  France;  the  efforts  of 
industry  the  most  vigorous;  the  animation  the  most  Hvely.  An  activity  has 
been  here,  that  has  swept  away  all  difficulties  before  it,  and  clothed  the  very 
rocks  with  verdure.  It  would  be  a  disgrace  to  common  sense  to  ask  the  cause; 
the  enjoyment  of  property  must  have  done  it.  Give  a  man  the  secure  posses- 
sion of  a  bleak  rock,  and  he  will  turn  it  into  a  garden;  give  him  a  nine  years' 
lease  of  a  garden,  and  he  will  convert  it  into  a  desert  .  .  .  Take  the  road  to 
Moneng,  and  come  presently  to  a  scene  which  was  so  new  to  me  in  France, 
that  I  could  hardly  beheve  my  own  eyes.  A  succession  of  many  well-built, 
tight,  and  comfortable  farming  cottages  built  of  stone  and  covered  with  tiles; 
each  having  its  httle  garden,  inclosed  by  cHpt  thorn-hedges,  with  plenty  of 
peach  and  other  fruit  trees,  some  fine  oaks  scattered  in  the  hedges,  and  young 
trees  nursed  up  with  so  much  care,  that  nothing  but  the  fostering  attention 
of  the  owner  could  effect  anything  like  it.  To  every  house  belongs  a  farm, 
perfectly  well  enclosed,  with  grass  borders  mown  and  neatly  kept  around  the 
corn  fields,  with  gates  to  pass  from  one  enclosure  to  another  There  are  some 
parts  of  England  (where  small  yeomen  still  remain)  that  resemble  this  country 
of  Beam;  but  we  have  very  httle  that  is  equal  to  what  I  have  seen  in  this  ride 
of  twelve  miles  from  Pau  to  Moneng.  It  is  all  in  the  hands  of  Httle  proprietors, 
without  the  farms  being  so  small  as  to  occasion  a  vicious  and  miserable  popu- 
lation. An  air  of  neatness,  warmth  and  comfort  breathes  over  the  whole, 
3 


34       THE  ''BACK  TO  THE  LAND"  MOVEMENT 

It  is  visible  in  their  new-built  houses  and  stables;  in  their  little  gardens;  in 
their  hedges;  in  the  courts  before  their  doors,  even  in  the  crops  for  their  poultry, 
and  the  sties  for  the  hogs.  A  peasant  does  not  think  of  rendering  his  pig 
comfortable  if  his  own  happiness  hang  by  the  thread  of  a  nine  years'  lease. 
We  are  now  in  Beam,  within  a  few  miles  of  the  cradle  of  Henry  IV.  Do  they 
inherit  these  blessings  from  that  good  prince?  The  benignant  genius  of  that 
good  monarch  seems  to  reign  still  over  the  country;  each  peasant  has  the  fowl 
in  the  pot." 

Peasant  Proprietors. — John  Stuart  Mill,  in  discussing  ''peasant 

proprietors"  in  1848,  after  reviewing  the  evidence  of  many  different 

writers,  sums  up  his  own  conclusions  in  these  sane  words: 

''The  experience,  therefore,  of  this  celebrated  agriculturist  (Arthur 
Young)  and  af>ostle  of  la  grande  culture,  may  be  said  to  be,  that  the  effect  of 
small  properties,  cultivated  by  peasant  proprietors,  is  admirable,  when  they 
are  not  too  small;  so  small,  namely,  as  not  fully  to  occupy  the  time  and  atten- 
tion of  the  family;  for  he  often  complains,  with  great  apparent  reason,  of  the 
quantity  of  idle  time  which  the  peasantry  had  on  their  hands  when  the  land 
was  in  small  portions,  notwithstanding  the  ardor  with  which  they  toiled  to 
improve  their  httle  patrimony,  in  every  way  which  their  knowledge  or  ingen- 
uity could  suggest.  He  recommends  accordingly,  that  a  limit  of  subdivision 
should  be  fixed  by  law;  and  this  is  by  no  means  an  indefensible  proposition  in 
countries,  if  such  there  are,  where  the  subdivision,  having  already  gone  farther 
than  the  state  of  capital  and  the  nature  of  the  staple  articles  of  cultivation 
render  advisable,  still  continues  progressive.  That  each  peasant  should  have 
a  patch  of  land,  even  in  full  property,  if  it  is  not  sufficient  to  support  him  in 
comfort,  is  a  system  with  all  the  disadvantages,  and  scarcely  any  of  the  benefits 
of  small  properties;  since  he  must  either  hve  in  indigence  on  the  product  of 
his  land  or  depend  as  habitually  as  if  he  had  no  landed  possessions,  on  the 
wages  of  hired  labor;  which,  besides,  if  all  the  lands  surrounding  him  are  held 
in  a  similar  manner,  he  has  httle  prospects  of  finding.  The  benefits  of  peasant 
properties  are  conditioned  on  their  not  being  too  much  subdivided;  that  is, 
upon  their  not  being  required  to  maintain  too  many  persons,  in  proportion  to 
the  produce  that  can  be  raised  from  them  by  those  persons." 

These  words  of  Mill  have  an  interesting  confirmation  in  the 

so-called  Wilson-Wallace  Report  of  1914,  a  report  made  by  two 

qualified  agricultural  experts  of  lowa.^ 

"We  have  also  made  a  pretty  thorough  investigation,"  says  this  report, 
"of  the  methods  used  by  the  British  government  to  furnish  land  to  the  land- 
less. There  are  four  or  five  counties  in  Ireland  where  the  land  is  inferior,  the 
rainfall  very  heavy,  and  the  people  very  poor,  hving  on  very  small  farms,  which 
can  at  best  afford  them  only  the  food  needed  to  support  their  families,  whose 
male  members  spend  the  summers  in  England  or  Scotland,  working  for  money 
to  provide  the  winter  necessaries  for  the  family.  The  congested  district  board 
has  bought  up  the  lands  in  these  counties,  has  divided  them  into  economic 
areas  or  holdings  large  enough  to  support  a  family,  twenty  acres  being  the 
minimum,  and  is  building  houses  on  them.  It  is  placing  the  congested  popu- 
lation on  these  areas,  charging  them  three  and  one-haLf  per  cent  interest  on 
the  value  of  the  land  for  sixty-eight  and  one-half  years,  at  the  end  of  which 
time  they  own  the  land  in  fee  simple.  They  work  under  very  strict  limitations, 
however.    They  cannot  sell  or  divide  the  land." 

2  Agricultural  conditions  in  Great  Britain  and  Ireland.  By  James  Wilson 
and  Henry  Wallace.  Pubhshed  by  the  Iowa  Department  of  Agriculture, 
Des  Moines. 


IN  HOLLAND  35 

Edwin  A.  Pratt,  a  British  writer  on  present  day  problems  in 
Agriculture,  a  friend  of  tenancy  rather  than  ownership,  has  much 
to  say  concerning  peasant  proprietary  at  home  and  abroad.^  He 
criticises  the  "excessive  degree  to  which  the  subdivision  of  small 
properties  has  been  carried"  in  France,  Generation  after  genera- 
tion this  subdivision  has  gone  on.    Says  Pratt: 

"Even  again  a  property  of  20  to  25  acres  may  be  represented  by  30,  40, 
or  50  small  patches  and  parcels  scattered  over  an  entire  commune  ...  In 
the  cultivation  of  these  scattered  fragments  of  land  the  practice  followed  by 
successive  generations  of  peasant  proprietors  of  France  has  been  to  produce 
a  little  of  everything — vines,  vegetables,  corn,  oats,  barley,  hemp,  etc. — on  the 
same  soil  irrespective  of  its  suitabihty  for  such  crops,  the  great  idea  of  the 
cultivator  being  that  he  should  avoid  spending  any  money  on  the  supply 
of  his  domestic  wants  .  .  .  But  the  work  of  cultivating,  mainly  by  hand, 
so  many  separate  morsels  of  land,  for  the  production  of  so  many  differ- 
ent crops,  represents  a  degree  of  toil  that  has  often  been  only  slavery  under 
a  different  name." 

Pratt  quotes  Lafarque,  Lavergne,  Michelet,  Verney,  Lecou- 
teaux,  and  other  French  writers  to  bear  out  his  contentions. 
Financially,  says  Pratt,  the  French  peasants  are  in  a  bad  way, 
since  ''few  of  the  peasants  hold  their  land  free  of  mortgage, 
and  many  of  them  are  heavily  indebted  besides."  And  in  spite 
of  the  recent  advance  in  agricultural  unions  and  cooperative 
enterprises,  says  Pratt,  "the  fundamental  disadvantages,  both 
moral  and  material,  inherent  to  the  system  of  peasant  proprietary 
still  remain." 

In  Holland. — Speaking  of  Holland  the  same  writer  says:  "In 
Holland  the  position  brought  about  by  peasant  proprietary  is,  in 
some  respects,  still  more  acute  than  in  France."  Here  most 
"farms"  are  under  four  acres  in  size,  and  very  few  contain  over 
ten  acres.  The  Dutch  landowners  are  generally  satisfied  with  a 
return  of  two  and  one-half  to  three  per  cent.  The  small  holdings 
of  a  farm  usually  comprise,  not  one  piece  of  land,  but  many  differ- 
ent strips  or  parcels.  The  parceling  of  the  land  into  these  long 
strips  is  clearly  illustrated  in  Pratt's  book  by  a  reproduction  of 
the  plan  of  the  commune  of  Vledder  (Drenthe),  Holland.  The 
average  dimensions  of  a  strip  of  land  in  one  part  of  this  commune 
is  380  yards  by  14  yards.  In  one  instance  there  is  a  length  of 
428  yards  to  a  breadth  of  4  yards.  Another  strip  shows  a  length 
of  1275  yards  and  a  width  of  22  yards.  Mention  is  made  of  one 
wealthy  farmer  whose  holdings  comprise  90  acres,  consisting  of 
78  separate  strips  of  land  in  different  parts  of  his  commune. 

3  Pratt,  E,  A.  The  Transition  in  Agriculture.  London,  1909.  John 
Murray,  Pubhsher,  one  shilling. 


36        THE  "BACK  TO  THE  LAND"  MOVEMENT 

Concerning  the  Danish  "  peasant  proprietors,"  whose  thrift  is 
much  heralded  in  America,  Pratt  has  this  to  say: 

"  Nominally,  the  peasant  proprietors  who  constitute  so  important  a  section 
of  the  Danish  people  are  freeholders;  practically  they  are  saddled  with  a 
mortgage  debt  estimated  at  about  $300,000,000,  and  representing  55  per  cent 
of  the  value  of  their  farms,  with  buildings,  stock,  and  improvements.  The 
debt  is  largely,  though  not  entirely,  due  to  certain  credit  associations  which 
were  formed  in  Germany  in  the  'fifties  to  enable  the  Danish  agriculturists  to 
purchase  their  farms  or  holdings,  mortgages  up  to  50  or  60  per  cent  of  the 
purchase  price  being  granted,  with  repayment  extending  over  periods  of  from 
50  to  100  years  .  .  .  Interest  and  repayrnent  of  principal  still  constitute  a 
heavy  burden,  and  many  a  Danish  farmer  is,  with  all  his  family,  working  for 
long  hours,  and  looking  to  England  for  the  profits  he  makes  on  his  produce, 
not  so  much  for  his  own  gain  as  to  satisfy  the  demands  of  his  German  creditors." 

Effect  of  Cooperation. — With  the  coming  in  of  successful  cooper- 
ation in  Denmark — perhaps  the  world's  best  example  of  cooper- 
ation— and  with  the  anxiety  of  the  farmers  to  buy  the  land  there 
came  a  substantial  increase  in  the  price  of  the  land.  Thus  it 
comes  about,  says  Pratt,  that  ''the  Danish  small  holder  who 
becomes  a  peasant  proprietor  starts  by  having  to  pay  an  altogether 
artificial  price  for  the  land  he  purchases;  he  sinks  in  the  ownership 
of  that  land  present  capital  which  would  otherwise  be  available 
for  the  purchase  of  stock  and  for  other  expenses;  and  he  incurs, 
in  place  of  rent,  a  rigid  mortgage  debt  unduly  swollen  by  the  exces- 
sive price  he  has  agreed  to  pay  for  his  farm.'* 

An  Objection  to  Small  Holdings. — And  as  a  final  objection  to 
the  very  smaU  holding,  Pratt  has  this  to  say: 

"  And  then  there  is  that  last  problem  of  all  for  the  solution  of  the  small 
owner!  What  is  to  become  of  his  few  acres  when  he  dies?  If  he  leaves  them 
to  his  widow  and  she  sells,  she  will  do  so  at  a  disadvantage.  If  he  divides 
his  holding  equally  among  his  children,  and  these  in  turn,  divide  their  share 
among  their  children,  it  will  not  be  long  before  a  state  of  things  is  reached 
analogous  to  that  found  in  certain  parts  of  Italy,  where  twenty-five  per  cent 
of  the  peasants  have  properties  of  less  than  one-fourth  acre  each." 

Passing  now  to  the  German  farmer,  we  have  a  vivid  picture 
of  his  customs,  as  given  in  a  report  by  F.  T.  H.  von  Engelken 
of  Florida:^ 

*' German  Customs. — It  can  well  be  beheved  that  to  an  American  farmer 
a  walk  through  the  country  in  Germany  is  full  of  interest.  At  first  glance 
many  of  the  customs  and  conditions  are  incomprehensible,  and,  to  our  large 
ideas,  appear  almost  absurd.  It  is  only  in  discussing  with  the  German  farmer 
his  conditions  and  giving  him  an  idea  of  those  existing  in  our  country  that  the 

*63  Cong.  1  Sess.  Sen.  Doc.  201.  The  German  Farmer  and  Cooperation. 
F.  J.  H.  von  Engelken,  Washington,  1913. 


THE  GERMAN  FARMER  37 

underlying  principles  and  unyielding  circumstances  which  control  German 
agricultural  operations  are  made  clear,  and  that  an  idea  is  obtained  of  the 
reasons  which  make  necessary  their  pecuHar  methods. 

"It  must  be  borne  in  mind  from  the  first  that  Germany  is  a  country,  not 
of  farms,  or  even  small  farms,  but  of  patches  of  land.  A  German  farmer  may 
own  as  high  as  100  acres  of  land,  but  instead  of  lying  in  a  body,  as  with  us, 
and  being  cultivated  in  large  fields  with  modern  tools,  his  entire  holding  will 
be  broken  up  into  innumerable  small  plots  with,  perhaps,  no  two  adjoining, 
and  these  plots  scattered  over  the  country  on  all  ^ides  of  the  village  in  which 
he  makes  his  home.  The  entire  country  is  therefore  divided  into  small  tracts, 
generally  oblong  in  shape,  ranging  from  15  to  20  feet  wide  and  from  200  to 
400  feet  long.  These  tracts  are  never  separated  from  each  other  by  fences, 
for  fences  are  an  almost  unknown  quantity  in  agricultural  Germany.  The 
dividing  line  between  two  tracts  is  marked  by  a  stone  set  in  the  ground,  and 
so  closely  are  they  planted  that  if  three  adjoining  tracts  were  planted  in  the 
same  grain  crop  it  would  be  impossible  for  a  stranger  to  definitely  locate  any 
one  of  the  three  without  hunting  up  the  boundary  stone.  It  is  rarely  the  case, 
however,  that  adjoining  tracts  are  planted  in  the  same  crops,  for  they  belong 
to  different  owners  who  plant  independently  and  what  they  wish.  In  walking 
through  the  country  it  is  therefore  quite  a  usual  sight  to  see  a  plot  of  land  30 
feet  in  width,  and  perhaps  300  feet  in  length,  planted  in  rye,  adjoining  it  one 
12  feet  in  width  and  of  the  same  length  planted  in  stock  beets,  then  one  20  feet 
wide  of  the  same  length  in  oats,  then  one  40  feet  wide,  same  length,  in  potatoes, 
then  one  perhaps  25  feet  wide  in  wheat,  and  so  on  through  the  entire  fist  of  the 
various  crops  grown  in  that  particular  section.  These  tracts  may  each  belong 
to  a  different  farmer  in  that  community,  and  each  farmer  there  will  own  from 
20  to  perhaps  100  such  tracts  scattered  all  over  the  'Bezirk'  or  locahty  in 
which  he  lives.  In  the  hay  country,  for  instance,  it  is  a  common  sight  to  see 
what  appears  to  be  a  field  of  40  acres  or  more  of  hay,  which  at  first  glance 
would  appear  to  be  a  very  respectable  hay  field,  according  to  our  ideas.  A 
walk  into  it,  however,  will  show  that  it  is  dotted  all  over  with  boundary  stones 
showing  that  it  is  owned,  not  by  one  man,  but  perhaps  by  fifty,  each  of  whom 
when  the  time  comes  will  cut  his  Httle  patch  out  of  the  field  whenever  he  is 
ready,  and  moreover,  will  cut  it  with  a  scythe  as  his  forefathers  have  done  for 
generations.    The  value  of  such  land  ranges  from  $300  to  $1000  per  acre  .  .  . 

"How  Germans  Live. — Having  thus  given  a  brief  outline  of  the  peculiar 
system  under  which  the  German  farmer  operates,  let  us  follow  one  to  see 
where  and  how  he  lives,  for  it  is  apparent  that  he  does  not  live  on  the  land 
among  his  crops. 

"  Germany  is  literally  dotted  with  villages,  and  these  villages  are  so  unlike 
anything  in  our  country  that  they  must  really  be  seen  to  be  appreciated.  Rang- 
ing in  size  from  10  to  200  homes  and  with  a  population  of  from  50  to  1000, 
they  are  scattered  all  over  the  country  as  if  sown  there  by  some  giant  hand. 
Rarely  as  distant  one  from  the  other  as  two  miles,  there  are  often  two  or  three 
clustered  almost  within  a  stone's  throw  of  each  other,  and  they  are  as  peculiar 
and  as  striking  in  their  difference  from  our  country  towns  as  are  the  methods 
under  which  their  inhabitants  work  from  ours. 

"Throughout  almost  entire  Germany  the  ground  plan  of  the  farmer's 
home  is  the  same.  The  buildings  are  always  of  brick  or  stone  (the  very  old 
houses  being  made  of  a  framework  of  timbers  with  a  rubble  plaster  filling), 
and  the  stables  and  storehouses  are  also  built  of  the  same  lasting  and  non- 
combustible  materials.  Roofs  are  of  tile,  it  now  being  against  the  law  to  use 
thatch.  The  house  always  fronts  on  the  street  or  road.  Built  against  one  wall 
of  this  is  the  storehouse,  a  continuation  of  this  is  used  for  stables,  and  from 
this  again  continue  the  sheds  for  tools,  etc.  This  group  of  buildings  is  built 
up  on  four  sides  of  a  square,  forming  in  the  center  a  large  court.  On  one  side 
of  the  house  is  the  gate  opening  into  the  road,  and  when  this  is  closedthe  whole 


38       THE  "BACK  TO  THE  LAND"  MOVEMENT 

place  is  secure  from  trespass  .  .  .  The  outbuildings  are  also  substantially 
built  with  the  second  floors  supported  either  by  heavy  timbers  or  by  iron  beams. 
The  storehouse  is  used  for  storing  the  crops  from  the  fields,  there  being  no 
buildings  of  any  kind  on  the  land.  The  stables  are  used  for  the  milch  cows 
and  for  the  beef  cattle  being  fattened,  as  well  as,  of  course,  for  the  necessary 
horses.  It  is  one  of  the  peculiar  customs  of  Germany  that  wherever  the  soil 
is  rich  and  is  highly  cultivated  the  cows  and  hogs  and  beef  cattle  are  never 
taken  out  of  the  stables  after  once  being  put  in.  They  are  literally  in  for  life. 
Green  food  is  brought  to  them  daily,  and  they  are  well  taken  care  of.  Cattle 
are  chained  to  their  stalls,  each  with  its  drinking  trough,  and  they  are  daily 
cleaned  off  and  bedded  down  knee  deep  in  straw.  Hogs  are  kept  in  the  same 
way.  Once  in  their  pens  they  remain  there  till  sold  to  the  butcher;  they  eat 
and  sleep  and  grow,  nothing  else.  This  system,  while  apparently  very  trouble- 
some, is  in  vogue  for  two  reasons;  first,  the  land  is  too  valuable  for  pasturage, 
as  well  as  being  in  too  small  tracts,  and  secondly,  by  keeping  hvestock  in 
this  manner  every  bit  of  manure  is  saved,  and  manure,  as  one  farmer  aptly 
stated,  is  the  life  of  German  agriculture. 

^^ Saving  Fertilizer. — The  method  of  saving  this  manure  is  an  excellent  one, 
and  is  one  that  could  be  used  to  great  advantage  by  our  farmers.  In  the  center 
of  the  court  around  which  stands  the  buildings  is  a  large  square  pit  about  five 
feet  in  depth.  On  one  corner  is  a  runway  by  means  of  which  a  wagon  can  be 
run  into  the  pit  to  facihtate  loading.  This  large  pit  is  for  the  dry  manure, 
and  into  it  is  thrown  everything  with  any  fertihzing  value. 

"Between  this  and  the  stable  is  a  deep  concrete-lined  well,  much  deeper 
than  the  dry  manure  pit,  and  this  is  used  for  collecting  the  liquid  manure. 
This  well  is  made  water  tight,  and  into  it  lead  drains  from  all  the  stables  and 
pens,  as  well  as  from  the  dry-manure  pit.  The  Hquid  thus  collected  is  pumped 
from  this  well  into  tanks  and  taken  to  the  fields,  where  it  is  sprayed  on  the 
land.  It  can  be  stated  here  that  this  economical,  thrifty,  and  intelligent  use 
of  natural  fertiUzers  has  made  Germany  a  farming  nation  which,  with  a  country 
smaller  than  the  State  of  Texas,  and  with  one-third  of  its  area  covered  with 
forests,  produces  95  per  cent  of  its  own  food  products,  and  its  population  is 
around  65,000,000. 

"  Women  do  the  Work. — In  Germany,  it  must  be  understood,  the  greater 
portion  of  the  farm  work  is  done  by  the  women.  It  is  a  common  sight  to  see 
women  hoeing  or  pitching  hay  or  spreading  manure,  and  they  do  it  well  and 
cheerfully.  The  girls  of  the  poorer  famiHes  go  into  service  as  maids,  which 
means  that  they  do  not  only  a  share  of  the  housework,  but  also  their  full 
proportion  of  the  work  about  the  stables  and  in  the  fields.  For  this  service 
a  girl  of,  say,  sixteen  or  seventeen  years  wUl  receive  wages  of  three  dollars  a 
month,  with  board  and  lodging.  She  becomes  a  member  of  the  family  and  is  con- 
sidered and  treated  as  such.  It  would  be  an  interesting  experience  for  some  of 
our  farm  workers  to  try  to  keep  up  with  one  of  these  young  girls  in  a  day's  work. 

"The  tendency  in  Germany  is  away  from  tenant  farming  and  towards 
ownership.  This  movement  is  of  course  encouraged  by  the  Government, 
which,  in  many  cases,  provides  the  medium  for  the  conversion  of  large  estates 
into  small  holdings,  extending  at  the  same  time  a  helping  hand  to  the  small 
farmer  in  the  purchase  of  the  subdivisions.  Other  than  this  breaking  up  of 
large  estates,  real  estate  transfers  in  agricultural  Germany  are  the  exception 
rather  than  the  rule.  In  fact,  it  is  frequently  impossible  to  buy  from  the  small 
farmers  their  holdings.  Instances  are  common  where  two  or  three  times  the 
value  has  been  oflfered  and  refused." 

In  Australia. — Let  us  turn  now  to  a  country  of  large  holdings, 
Australia.  This  country  is  generally  recognized  as  one  having  too 
large  parcels  of  land  in  its  ^' farms."    This  feeling  led  the  Legis- 


IN  AUSTRALIA  39 

lative  Assembly  of  Victoria,  Australia,  to  pass  a  series  of  "Closer 
Settlement  Acts"  having  for  their  aim  the  breaking  up  of  the 
larger  holdings  and  the  placing  of  the  smaller  farms  in  the  hands 
of  actual  owners. 

These  acts  furnish  land  to  the  settler  on  what  was  intended 
to  be  liberal  terms.  The  settler  has  thirty-one  and  one-half  years 
to  pay  for  his  land,  his  annual  payment  (principal  and  interest) 
being  6  per  cent.  And  when  he  makes  improvements,  the  Govern- 
ment advances  him  a  loan  to  the  value  of  sixty  per  cent  of  his 
improvements;  likewise  he  secures  liberal  advances  for  the  purchase 
of  stock.  The  Government,  in  carrying  out  these  Closer  Settle- 
ment Acts  from  1904  to  1914,  in  the  dry,  irrigated  area,  bought 
some  87  large  estates,  containing  a  total  of  468, 188  acres.  The 
original  payment  for  these  lands  was  about  $30.00  an  acre,  but 
the  additional  ''loading"  on  this  cost,  due  to  various  expenses, 
brings  the  cost  price  up  to  $35.00  an  acre.  These  lands  were 
divided  into  some  three  thousand,  three  hundred  and  seventy-six 
allotments  for  sale  to  settlers  at  cost,  on  the  liberal  terms  named 
above.  To  quote  from  the  Government's  Report  on  the  adminis- 
tration of  these  acts:  ^ 

"The  whole  design  of  the  Closer  Settlement  Legislation  as  may  be  gath- 
ered from  its  apparently  liberal  terms  of  repayment,  is  to  enable  men,  experi- 
enced and  able  in  farming  pursuits,  but  possessed  of  limited  capital,  to  get 
on  to  their  own  holdings,  and  stay  there.  The  conditions  imposed  by  such 
legislation,  however,  often  defeat  its  own  purpose." 

The  report  exposes  some  very  interesting  conditions,  the  most 
important  of  which  may  be  profitably  reviewed  here.  Wheat 
growing  is  mainly  relied  upon  by  the  settlers  on  these  allotments. 
And,  oddly  enough,  the  farms  have  proved  too  small  for  profitable 
wheat  growing.  The  average  size  of  the  wheat  farm  in  certain 
quarters  is  300  acres,  and  the  least  area  on  which  a  satisfactory 
living  at  wheat-growing  can  be  made  in  this  region  is  given  as 
six  hundred  acres  by  the  settlers.  Again,  in  carrying  out  the  acts, 
some  unsuitable  land  was  unloaded  onto  the  State  at  a  good  price. 
This  land  is  known  as  dry-farming  land,  and  hence  suited  only  to 
cereal  growing  and  stock  raising.  During  the  investigation  carried 
on  by  the  committee  making  this  report,  the  chairman  of  the 
Settlement  Board  was  asked  in  effect,  "Can  a  man  live  on  three 
hundred  acres  of  land  suitable  only  for  wheat-growing  (that  is, 
which  does  not  permit  of  combined  wheat  growing  and  dairying 

^  Report  from  the  Sub-Committee  of  the  Cabinet  on  the  Administration 
of  the  Closer  Settlement  Acts.    Victoria,  Melbourne,  Aus.,  Feb.  3,  1914. 


40       THE  "BACK  TO  THE  LAND"  MOVEMENT 

or  grazing)  at  $40.00  per  acre,  which  land  will  only  carry  one 
'wool'  sheep  to  the  acre?"  His  answer  was  disconcerting.  He 
said,  ''I  do  not  think  so."  Settlers  in  this  region  impressed  on 
the  committee  that  the  least  area  on  which  a  satisfactory  living 
at  wheat  growing  could  be  made  was  six  hundred  acres,  or,  twice 
the  average  size  allotment  held  by  settlers.  Hence  the  result 
of  many  years  of  experimentation  in  ''closer  settlements"  in  the 
dry  area  of  Australia  proved  that  small  holdings  are  not  a  success 
under  certain  conditions;  that  larger  holdings  must  be  encouraged 
under  certain  circumstances;  and  that  in  any  event  the  size  of 
the  holding  should  be  governed  by  such  economic  conditions  as 
the  nature  of  the  soil  and  climate,  the  product  of  the  soil,  and  the 
relation  of  this  product  to  the  wide  question  of  supply  and  demand. 

In  New  Zealand  the  farming  industry  is  receiving  the  closest 
attention.  At  the  1916  meeting  of  the  New  Zealand  Farmers 
Union,  held  at  Wellington,  among  the  important  matters  discussed 
was  that  of  the  adoption  of  more  effective  measures  for  preventing 
the  increase  of  larger  holdings  of  land,  it  being  considered  detri- 
mental to  the  development  of  the  country  in  general. 

The  Problem  in  the  United  States. — Two  classes  of  our  people 
are  enthusiastically  advocating  the  "Back  to  the  Land"  move- 
ment. Many  of  these  accept  the  forty-acre  farm  unit  as  the  ideal. 
These  two  classes  are  the  editors  of  our  city  papers  and  the  "High 
Cost  of  Living"  sufferers,  also  city  dwellers.  To  the  city  dweller, 
one  cure  for  the  high  cost  ot  living  is  cheap  food.  But  while  cheap 
food  would  be  good  for  the  city,  it  would  be  bad  for  the  farm. 
Conversely,  dear  food  is  good  for  the  farmer,  since  he  has  it  to 
sell,  but  bad  for  the  city  man. 

The  problem  is  a  complex  one.  The  metropolitan  editors 
usually  say:  "Be  independent.  Be  good  citizens.  And  by  quitting 
the  city  for  the  farm,  you  will  become  both."  Such  a  readjustment 
of  our  population,  should  there  be  any  considerable  drift  to  the 
land  or  development  of  small  holdings,  would  demand  a  serious 
consideration  of  these  economic  problems:  (1)  Subtract  labor  from 
the  city.  This  would  decrease  the  output  of  what?  If  this  shift 
would  merely  decrease  the  production  of  brass  jewelry,  artificial 
flowers  and  feathers,  gewgaws  and  luxuries,  a  gain  to  society  rather 
than  a  loss  would  occur.  Such  a  change  in  consumption  would 
doubtless  be  welcome — if  it  could  be  effected.  (2)  Add  labor  to 
the  land.  This  would  increase  the  output  of  what?  More  of  the 
staple  crops — corn,  wheat,  cotton,  etc. — are  not  wanted.  Addi- 
tional labor  thrown  into  competition  with  the  farmers  now  engaged 


WHAT  ARE  LUXURIES?  41 

in  the  production  of  these  staples  would  simply  lower  the  earnings 
of  all  thus  employed  to  a  meager  subsistence  level.  In  fact  it 
frequently  happens  now  that  there  is  an  overproduction  of  these 
crops,  resulting  in  hardship  to  producers,  and  in  Uttle  or  no  benefit 
to  consumers. 

The  testimony  of  LeGrand  Powers,  before  the  United  States 
Industrial  Commission  at  Washington,  in  1899,^  is  especially 
interesting  in  this  connection. 

Question:  What  have  you  to  say  in  regard  to  the  decline  in  the  price  of 
agricultural  products  in  the  last,  say,  thirty  years? 

Powers:  There  has  been  a  very  large  decline  at  points  where  the  price  is 
affected  by  the  cost  of  transportation ;  there  has  been  a  less  decline  in  points 
from  which  that  transportation  has  carried  the  produce.  There  has  been  a 
decline,  but  small,  in  articles  that  have  not  been  overproduced;  there  has  been 
an  enormous  declme  in  the  articles  whose  production  has  increased  faster  than 
population  .  .  . 

Question:   That  holds  good  in  all  farm  products,  grains,  cotton,  etc.? 

Powers:  I  believe  that  that  principle  in  general  appUes  to-day  the  same 
as  it  did  two  hundred  years  ago. 

Question:  The  capacity  to  consume,  by  purchase  or  otherwise,  has  as 
much  effect  on  prices  of  products  as  the  question  of  overproduction  or  under- 
production? 

Powers:  That  comes  in  as  a  factor  slowly  modifying  prices.  With  certain 
articles  it  has  far  greater  influence  than  with  others.  The  amount  of  bread 
which  a  man  can  eat,  the  number  of  pounds  of  breadstuffs,  including  wheat, 
com,  oats  and  all  others  that  we  use  for  human  food  varies  but  httle.  We  may 
change  the  form  of  it,  but  the  number  of  pounds  a  human  being  eats  is  sub- 
stantially the  same.  He  may  substitute  commeal  or  oatmeal  for  wheat,  but 
the  number  of  pounds  consumed  will  be  substantially  the  same.  The  general 
proposition  is  not  true  to  so  great  an  extent  with  articles  of  food  that  may  be 
called  luxuries.  The  rule  governing  the  consumption  of  strawberries  or  Cali- 
fornia oranges  or  pears  or  fruit  is  quite  different.  Their  consumption  may  be 
increased  enormously,  and  such  increase  may  exert  but  a  Httle  influence  in 
decreasing  the  consumption  of  these  other  things.  As  showing  something  of 
the  power  to  increase  the  consumption  of  food  luxuries,  I  wm  mention  the 
fact  that  MinneapoHs,  as  a  center  of  consumption  and  distribution  of  the 
Northwest,  shows  a  doubling  of  fruit  sales  every  three  years  for  the  last  few 
years.  Population  has  been  doubling  once  every  fifteen  years,  but  the  sales 
of  fruit  double  every  three  years,  or  eight  times  as  fast  as  population.  A 
certain  portion  of  the  reUef  of  agriculture  must  come  from  an  increased  con- 
sumption of  these  things,  which  represent  relatively  a  large  amount  of  labor. 
The  increased  demand  of  our  people  in  the  United  States  for  these  luxuries 
represents  about  as  much  for  the  farmer  as  our  increased  exports.  Thus,  note 
canning,  which  represents  one  phase  of  this  business.  It  began  about  1865 
or  1870.  Now  the  amount  of  fruits,  vegetables,  fish,  and  meat  that  is  con- 
sumed in  cans  in  this  country  is  very  great." 

What  are  Luxuries? — The  "luxuries"  mentioned  by  Mr. 
Powers  are  now  looked  on  as  necessaries,  rather  than  as  luxuries, 
particularly  the  California  oranges.  The  1914  report  of  the 
general   manager   of   the   California   Fruit    Growers'    Exchange, 

6  U.  S.  Industrial  Commission  Report,  Vol.  X,  p.  186. 


•X 


42 


THE  "  BACK  TO  THE  LAND  "  MOVEMENT 


G.  Harold  Powell,  has  this  to  say  on  the  consumption-overproduc- 
tion problem: 

"During  the  past  few  years  the  Exchange  has  increased  the  per  capita 
consumption  of  citrus  fruits  by  advertising.  The  population  of  the  United 
States  has  increased  21  per  cent  during  the  past  decade.  The  consumption 
of  CaUfornia  oranges  increased  74.6  per  cent  during  the  same  period  .  .  . 
The  citrus  fruit  crop  of  California  increases  255  per  cent  from  1895  to  1900; 
71.7  per  cent  from  1900  to  1905;  10.9  per  cent  from  1905  to  1910;  and  48.5 
per  cent  from  1910  to  1914.  The  production  will  increase  rapidly  in  the  future, 
the  acreage  having  increased  128.9  per  cent  in  the  last  decade.  The  in- 
crease in  shipments  of  citrus  fruits  from 
Florida  and  California  have  more  than 
doubled  in  the  last  decade.  The  ex- 
change organizations  have,  therefore, 
an  obUgation,  not  only  to  sell  their  fruit 
wisely  from  year  to  year,  but  to  develop 
a  distributing  and  selling  system  and  an 
advertising  poUcy  at  the  same  time 
which  wiU  cause  consumption  to  keep 
pace  with  the  increase  in  production. 
Only  through  the  stimulation  of  con- 
sumption in  this  way  can  the  future 
financial  stability  of  the  two-hundred- 
miUion  dollars  invested  in  the  California 
citrus  industry  be  assured.  When  pro- 
duction exceeds  consumption,  then  the 
investment  of  the  grower  is  jeopardized 
.  .  .  There  are  certain  features  of  the 
California  industry  to  which  the  ex- 
change members  must  give  serious  con- 
sideration. They  relate  to  the  increase 
in  production  and  to  the  future  sta- 
bihty  of  many  investments  .  .  .  The 
solution  of  the  problems  outlined  will 
depend  primarily  on  a  large  increase  in 
the  per  capita  consumption  of  citrus 
fruits  and  the  ability  of  California  to 
meet  successfully  the  competition  of 
Florida  oranges  and  grapefruit  and  of  ItaHan  lemons.  There  are  a  few  lead- 
ing fundamentals  which  the  CaUfornia  industry  must  recognize  if  it  meets 
these  problems  successfully.  There  must  be  an  improvement  in  the  average 
standard  of  the  fruit  that  leaves  the  state,  both  in  grade  and  in  keeping  quality. 
This  makes  it  imperative  to  develop  the  manufacture  of  the  lower  grades 
into  by-products  .  .  .  There  must  be  an  improvement  in  the  care  of  groves 
so  that  more  fruit  of  higher  quality  may  be  produced  per  acre;  and  in  the  hand- 
ling of  the  fruit  so  that  decay  and  other  preventable  losses  are  eliminated  .  .  . 
Fruit  of  good  eating  quahty  only  can  be  shipped  in  the  future,  if  the  industry 
is  to  maintain  its  integrity  with  the  consumer  .  .  .  The  distribution  of  the 
oranges  and  lemons  must  be  uniform  throughout  the  year  ..."  (Fig.  6). 

This  lengthy  quotation  from  the  manager's  annual  report  has 
been  given  to  illustrate  the  significant  fact  that  a  great  industry 
can  be  conducted  in  such  a  way  as  to  improve  the  product  from 
year  to  year,  and  at  the  same  time  make  this  product  cheaper  to 
the  consumer  and  bring  more  to  the  producer.     And  the  whole 


Fig.  6. — G.  Harold  Powell,  Manager  of  the 

CaUfornia    Fruit  Growers'    Exchange,    Los 

Angeles,  Cal. 


TESTIMONY  OF  PROMINENT  WITNESSES  43 

process  has  been  perfectly  simple.  Advertising  has  widened  the 
market.  The  widened  market  has  made  possible  certain  large- 
scale,  cooperative  processes  in  production  and  marketing  and  a 
standardization,  whereby  all  possible  wastes  have  been  ehminated. 
This  has  left  more  income  to  the  producer  of  the  fruit,  and  a  smaller 
cost  for  a  better  orange  to  the  consumer.  It  has  produced  "sav- 
ings," not  "profits,"  as  the  cooperators  term  it. 

Concerning  the  standardizing  of  the  product  and  the  advertis- 
ing of  it,  the  manager  above  quoted  goes  on  to  say: 

"Primarily,  the  function  of  our  advertising  is  to  increase  the  consumption 
of  citrus  fruits.  To  do  this  it  is  necessary  to  have  a  brand  around  which  we 
can  build  our  advertising  arguments.  This  brand  is  the  consumer's  protection. 
It  is  his  guarantee  as  to  the  quality  of  the  fruit.  In  other  words,  we  want  him 
to  feel  that  all  he  needs  to  know  about  an  orange  or  lemon  is  that  it  is  "Sun- 
kist."  We  must  make  the  consumer  realize  that  the  name  "Sunkist"  on  an 
orange  or  lemon  means  just  what  the  Sterling  mark  means  on  silver.  Our 
advertising  will  create  in  the  minds  of  the  consumers  a  pubhc  consciousness 
of  the  food  value  of  oranges  and  lemons.  This  can  only  be  done  by  maintaining 
the  highest  possible  standard  of  quality,  for  unless  an  article  has  quahty,  it 
cannot  be  successfully  advertised.  The  permanent  prosperity  of  the  citrus 
industry  depends  on  getting  a  sufficient  number  of  people  to  use  oranges  and 
lemons,  and  this  can  most  thoroughly  and  economically  be  accomplished  by 
giving  the  public  the  reasons  why  they  should  use  them  and  suggesting  to 
them  the  various  ways  in  which  they  can  be  served.  Advertising  is  not  a 
mysterious  thing.  It  is  simply  teUing  the  people  the  truth  about  the  thing 
we  have  to  sell  and  telling  them  through  those  channels  in  which  they  have 
confidence  and  to  which  they  are  accustomed  to  look  for  information  and 
guidance." 

The  foregoing  discussion  is  given  at  some  length  to  illustrate 
the  truth  that  an  increase  in  production  is  good  for  the  farmer 
where  an  increase  in  demand  keeps  pace  with  such  increase  in 
production,  but  that  an  increase  in  the  production  of  staple  crops, 
where  demand  is  stationary,  is  bad  for  the  farmer. 

Testimony  of  Prominent  Witnesses. — The  bonanza  farm  of  the 
West  and  Northwest  is  a  wheat  farm.    It  stands  for  specialization. 
The  small  farm,  on  the  other  hand,  is  generally  used  for  diversified 
farming.    In  industry  the  trend  of  modern  times  is  towards  special- 
ization.   In  farming  there  are  two  discernible  tendencies,  the  one    \ 
towards  specialization  on  the  large  farm,  the  other  towards  diver-      )  \, 
sification  on  the  small  farm.     The  advantages  of  these  two  are  ' 
open  to  debate.    Doubtless  local  conditions  must  be  the  deciding 
factor  in  either  case.     Volume  X  of  the  Industrial  Commission 
Report  quoted  above,  contains  the  following  digest  of  testimony, 
pro  and  con,  on  the  advantages  of  the  small  farm,  as  given  by 
practical  farmers.^ 

7  Report  of  Industrial  Commission.  Vol.  X,  Washington,  1901,  pp. 
CXCVI-CXCVII. 


44  THE  "BACK  TO  THE  LAND"  MOVEMENT 

Robert  Ransom  Poole,  Commissioner  of  Agriculture,  Alahamn,. — 
Mr.  Poole  says  the  farmers  in  the  sandy  counties  of  Alabama  are 
more  progressive  than  the  large  farmers.  Mr.  Poole  thinks  that 
if  the  farmers  could  be  induced  to  sell  off  their  lands  in  smaller 
tracts  (than  three  hundred  and  twenty  to  two  thousand)  it  would 
be  much  better  for  the  country  as  a  whole,  but  the  person  who 
owns  property  paying  from  ten  to  fifteen  per  cent  on  the  invest- 
ment is  very  loath  to  part  with  it. 

Harry  Hammond,  Cotton  Planter,  Beech  Island,  South  Carolina. 
— ''I  know  of  no  record  in  history  where  a  race  of  small  proprietors 
has  been  prosperous.  Everywhere  they  seem  to  form  the  wretched 
residuum  of  labor  after  all  other  occupations  are  supplied." 

William  Budge,  Farmer  and  Real  Estate  Dealer,  Grand  Forks, 
North  Dakota. — Mr.  Budge  says  there  are  several  big  farms  in 
North  Dakota,  and  mentions  one  of  above  seven  thousand  acres. 
He  adds  that  he  would  like  to  see  them  all  out  of  the  way.  They 
take  up  so  much  space  that  they  hurt  the  school  districts.  The 
owners  ship  in  their  supplies  and  ship  their  wheat  out,  and  ship 
their  men  in  and  out.  The  plowing  is  done  with  gang  plows  .  .  . 
One  man  can  handle  one  hundred  and  sixty  acres  on  a  farm  of 
that  kind.  The  employees  are  generally  single  men.  The  farni 
owners  hire  a  crew  in  the  spring  and  let  them  go  in  the  fall,  except 
one  or  two  to  take  care  of  the  farm.  Mr.  Budge  thinks  some  of  the 
big  farms  are  profitable  and  some  are  not,  depending  on  how  they 
are  handled.  The  land  has  grown  in  value,  and  money  is  made  in 
that  way. 

Brynjolf  Prom,  Banker  and  Farmer,  Milton,  North  Dakota. — 
Mr.  Prom  (who  owns  and  farms  1120  acres)  says  the  effect  of 
bonanza  farming  is  not  good.  The  bonanza  farmers  do  not 
patronize  the  villages,  but  ship  in  goods  from  the  east,  and  act 
as  wholesale  grocery  houses  for  themselves.  They  are  also  proba- 
bly a  drawback  in  the  way  of  school  privileges,  which  they  do  not 
need,  and  if  there  are  small  farms  wedged  in  between  bonanza 
farms  the  occupants  of  the  small  farms  suffer.  The  bonanza  farms 
are  divided  up  into  different  parts  with  a  foreman  for  each  part. 
Each  has  a  Httle  village  of  its  own.  The  hired  help  are  usually 
single  men;  only  the  foreman  is  married.  The  bonanza  farms 
are  well  conducted  upon  strictly  business  principles,  the  farming 
is  done  more  scientifically  and  economically  than  on  the  small 
farms,  and  the  percentage  of  profit  is  larger;  but  the  general 
results  to  the  people  of  the  country  are  not  good,  and  the  people 
would  generally  favor  the  abolition  of  bonanza  farming. 


SOCIAL  VIEWPOINT  OR  INDIVIDUAL  VIEWPOINT  ?         45 

M.  F.  Greeley,  Stock  Farmer;  Editor  of  the  "Dakota  Farmer/' 
Gary,  South  Dakota. — Mr.  Greeley  considers  bonanza  farming  a 
curse  to  the  country  and  to  the  man  who  tries  it.  If  carried  too 
far,  after  population  gets  more  dense,  it  will  keep  thousands  of 
men  from  having  homes  of  their  own.  It  employs  men  in  squads, 
thus  eliminating  their  individuality  and  independence.  Those 
employed  on  these  farms  have  to  work  with  the  worst  kind  of 
men.  The  soil  is  abused  and  then  goes  to  other  people  in  small 
holdings  to  be  built  up  by  careful  rotation,  stock  farming  and 
tillage.  The  bonanza  farms  are  owned  by  men  who  spend  their 
money  in  the  cities  or  in  other  States.  They  rot  the  public  schools, 
and  detract  much  from  the  social  life  of  the  country.  Mr.  Greeley 
does  not  know  of  one  very  large  farm  that  has  been  running  for 
some  time  that  is  now  pajdng,  and  says  bonanza  farming  is  on 
the  decrease. 

Franklin  Dye,  Farmer,  Secretary  of  State  Board  of  Agriculture 
of  New  Jersey. — Mr.  Dye  believes  that  the  subdivision  of  bonanza 
farms  into  small  tracts  would  be  beneficial  by  increasing  the 
population  and  giving  employment  to  more  people.  The  oppor- 
tunity to  use  improved  machinery  on  a  very  large  scale  on  these 
farms  tends  to  make  their  competition  diastrous  to  Eastern  farmers. 

LeGrand  Powers,  Expert  in  Agriculture,  U.  S.  Census  Bureau, 
Washington,  D.  C. — Mr.  Powers  says  all  the  big  farms,  including 
the  Dalrymple  farm  in  Dakota,  are  in  the  market  for  breaking 
up,  just  as  the  big  farms  in  Southern  Minnesota  have  been  cut  up. 

Social  Viewpoint  or  Individual  Viewpoint? — Thus  far  in  this 
chapter  the  question  of  the  size  of  the  farm  has  been  considered 
from  the  social  standpoint.  The  views  once  held  by  Thomas 
Jefferson  on  the  subject  of  a  rural  versus  an  urban  population 
have  undergone  much  change  in  the  last  hundred  years.^  But 
the  question  is  still  an  important  social  problem,  and  one  which 
may  well  engage  the  powers  of  the  true  statesman.  The  social 
aspect  of  this  question  takes  on  significance  from  the  fact  that  the 
rural  population  of  to-day  determines  very  largely  the  character 
of  the  nation  to-morrow.  The  country  birth  rate  exceeds  the  city 
birth  rate.  Children  on  farms  are  an  economic  asset,  in  the  city 
an  economic  liability.  The  children  of  the  farm  to-day  recruit 
the  city  to-morrow.    Hence  if  the  country  is  to  be  occupied  by  an 

8  The  popular  usage  of  two  words  in  our  vocabulary  throws  an  interesting 
side  light  on  this  question  of  town  and  country.  From  the  Latin  urhs  (a  city) 
comes  our  word  ''urbane";  from  the  Latin  rus  (the  country)  comes  our  word 
rustic.  Webster's  dictionary  Mefines  these  two  terms  as  follows:  urbane; 
courteous  in  manners,  polite,  refined;  rustic;  rude,  awkward,  rough. 


/ 


< 


46  THE  "BACK  TO  THE  LAND  "  MOVEMENT 

inferior  class  to-day,  the  city  and  the  nation  of  to-morrow  will 
consist  of  an  inferior  class.  In  two  important  matters  the  city  is 
now  superior  to  the  country,  namely,  public  education  and  care 
of  public  health.  The  child  wanting  a  high  school  and  college 
education  must  go  to  the  city.  In  matters  of  health,  however, 
from  Jefferson's  day  down  almost  to  the  World  War,  popular 
opinion  seemed  to  hold  that  the  open  country  with  its  fresh  air 
was  the  home  of  good  health,  and  the  city  was  the  home  of  the 
physically  unfit.  But  the  World  War,  with  its  mihtary  draft  and 
consequent  medical  examinations  of  millions  of  young  men  from 
both  country  and  city,  showed  that  although  country  people  have 
a  better  chance  for  long  life,  yet  they  also  suffer  from  a  greater 
number  of  preventable  physical  defects.  The  city  consumer  who 
would  favor  the  bringing  into  our  country  and  settling  on  the  farms 
there  the  cheaper  labor  of  the  Orient  or  even  those  European 
peasants  whose  standards  of  living  are  low,  has  a  sadly  short- 
sighted view  of  his  country's  welfare.  Any  public  policy  which 
attempts  to  build  up  the  city  at  the  expense  of  the  country,  such 
as  a  protective  tariff  on  manufactured  goods,  may  easily  cause  a 
migration  from  the  country  to  the  city,  or  conversely,  a  migration 
to  the  country  of  immigrants  and  others  with  an  un-American 
standard  of  living.  The  important  thing,  from  the  standpoint 
of  a  noble  and  powerful  nation,  is  to  have  a  country  population 
with  a  high  standard  of  Uving.  And  such  a  high  standard  of  living 
is  fundamentally  a  question  of  the  individual  farmer's  economic 
welfare,  although  this  standard  includes  wants  of  a  so-called 
higher  order.  In  short,  the  private  welfare  of  the  farmer  is  the 
public  welfare  of  the  state. 

The  question  of  the  size  of  the  farm  may  be  briefly  considered 
from  the  standpoint  then  of  the  individual  farmer.  The  funda- 
mental question  is  the  same — What  will  produce  the  highest  net 
returns?  Under  the  law  of  survival  of  the  fittest,  those  farmers 
will  survive  whose  farms  conform  most  nearly  to  this  economic  test. 

Family  Size  Farm. — Numerous  investigations  and  ''surveys" 
have  been  made  recently,  looking  into  the  size  of  the  farm  business, 
thanks  to  the  newly  discovered  science  of  farm  management.  Only 
a  few  of  these  can  be  mentioned  here.  W.  J.  Spillman,  while 
Chief  of  the  Office  of  Farm  Management,  conducted  such  a  survey 
in  Chester  County,  Pennsylvania.  This  study  emphasizes  the 
''small-farm  fallacy"  (as  some  call  it),  and  shows  that  less  profits 
come  from  small  farms  than  from  large  farms.  Farms  of  from  30 
to  40  acres  required  for  each  crop  acre  $15.00  worth  of  machinery, 


FAMILY  SIZE  FARM  47 

as  compared  with  $9.00  worth  on  farms  of  160  acres  and  over. 
Thus  on  small  farms  the  expense  of  operation  is  much  greater 
per  unit  of  product  than  on  large  farms  of  similar  type.  The 
larger  the  farm  the  larger  the  total  income,  but  the  per  cent  of 
profits  is  independent  of  the  magnitude  of  the  business.  A  Ne- 
braska farm  management  survey  reached  the  conclusion  that  a 
"family  size  farm"  pays  best  (Fig.  7).  This  is  a  farm  which  fur- 
nishes work  for  the  younger  members  of  the  family  and  varies  in 
size  from  two  hundred  to  two  hundred  and  fifty  acres  in  eastern 
Nebraska.  A  farm  management  survey  in  Missouri,  on  the  "Size 
of  Farm  Business,"  also  finds  that  large  farms  yield  more  profits 


\  family  size  farm,  200  acres. 


than  small  farms  (Figs.  8  and  9).  On  the  large  farm,  77.2  acres 
of  crops  per  man  are  produced  as  compared  with  15.9  on  a  small 
farm.  The  horse  on  a  large  farm  cares  for  21.2  crop  acres,  as 
compared  with  7.3  acres  on  the  small  farm.  Numerous  other 
"surveys"  in  New  York  State  and  other  states  point  to  similar 
conclusions.  In  the  Weekly  News  Letter  of  the  Department  of 
Agriculture  for  March  15,  1916,  we  find  'this  statement,  "Recent 
farm-management  surveys  indicate  that  the  farmer  with  but  Httle 
capital  can,  as  a  rule,  make  a  better  living  by  renting  and  operating 
a  comparatively  large  farm  than  by  putting  his  money  into  a 
small  farm  which  he  can  buy  outright." 

Whether  this  statement  be  accepted  for  the  whole  truth  or 
not  (and  it  likely  is  not),  it  wisely  stresses  the  factor  of  the  purely 
commercial  or  economic  aspect  of  a  farm  enterprise. 


48 


THE  "  BACK  TO  THE  LAND  "  MOVEMENT 


In  Australia  the  300-acre  wheat  farm  has  proved  too  small. 
In  Dakota  the  7,000-acre  wheat  farm  has  proved  too  large.  Only 
actual  experimentation  can  tell  us  what  is  the  economical  size  of 
a  wheat  farm,  or  of  any  other  kind  of  a  farm.    The  experimenta- 


FlG.  8. — ^A  large  farm.    View  on  the  America  Sharon  Land  Company's  4U,0UU  acie  fann  ii 
Red  River  Valley  of  North  Dakota. 


Fig.  9. — Some  of  the  buildings  and  grain  elevators  on  the  America  Sharon  Land  Company's 

big  farm. 


-(( 


tion  of  the  past,  carried  on  in  the  various  countries,  as  chronicled 
in  the  preceding  pages,  tends  to  prove  that  while  big  farms  have 
bad  features  and  good  features,  so  also  the  small  farms  have  good 
features  and  bad  features.  The  socially  desired  solution  of  this 
problem  coincides  with  the  individually  desired  solution,  namely, 
that  sized  farm  which  yields  its  owner  the  highest  net  returns. 


INCREASING  CONSUMPTION  49 

The  Competition  Question. — Following  the  World  War  there 
was  a  tremendous  demand  in  the  metropolitan  press  to  settle 
retm-ning  soldiers  on  the  land.  The  Secretary  of  the  Interior 
sponsored  a  very  large-scale  plan  to  colonize  soldiers  on  agricul- 
tural lands  in  frontier  districts.  Without  entering  here  into  any 
discussion  of  the  merits  or  demerits  of  governmental  colonization 
schemes — a  very  large  question — we  may  well  face  one  phase  of 
the  question  of  placing  on  the  land  suddenly  a  large  number  of 
additional  farmers.  These  new  farmers  would  compete  with  the 
present  farmers.  Any  competition  which  increased  the  production 
of  staple  crops,  or  other  crops,  faster  than  demand  increased  for 
such  crops,  would  tend  to  lower  prices  for  such  crops.  In  such 
cases  we  would  have  overproduction — or  what  the  Single  Tax 
school  prefers  to  call  ''under  consumption."  The  effect  on  the 
producer  is  the  same.  An  increase  in  demand  would  be  necessary 
to  offset  the  competition  of  the  new  farmer,  assuming  such  new 
farmer  actually  to  be  placed  on  tillable,  productive  lands.  The 
question  of  increasing  the  demand  for  food  products,  of  increas- 
ing their  consumption,  is  a  question  of  more  than  academic 
interest.  With  two-thirds  of  the  people  now  living  in  cities  and 
towns,  and  with  their  potential  bu5dng  power  in  the  fields  of 
food  products,  manufactured  goods,  amusements,  etc.,  it  becomes 
a  matter  of  practical  consideration  as  to  how  much  they  can 
and  ought  to  spend  for  their  food  supply  as  compared  with  their 
other  wants. 

Increasing  Consumption. — Under  one  condition  could  a  system 
of  "small  proprietor"  agriculture  flourish  at  the  present  time  in 
the  United  States,  and  that  is,  there  must  be  an  enormous  increase 
in  the  consumption  of  agricultural  products  to  offset  the  increase 
in  production.  With  the  staple  crops  there  is  an  unknown  margin 
of  increase.  Cotton,  with  its  hundred  by-products,  is  an  example. 
Any  one  or  more  of  these  products  may  suddenly  flare  into  world- 
wide demand.  So  also  with  the  various  uses  and  by-products  of 
corn,  wheat  and  oats.  But  clearly  more  is  to  be  expected  from  the 
increase  in  the  consumption  of  the  minor  products  of  the  farm, 
such  as  milk,  cheese,  butter,  poultry  and  poultry  products,  etc. 
The  French  peasant,  however  poor,  is  said  to  enjoy  his  ''fowl  in 
the  pot."  Yet  to  our  city  dweller  a  roast  chicken  is  a  luxury. 
The  poultry  crop  now  has  about  the  same  value  as  the  wheat  crop, 
but  the  room  for  increased  consumption  here  is  very  vast.  But 
increased  consumption  seems  dependent  on  either  improved  quality 
or  lowered  price,  and  lowered  price  in  turn  depends  on  economies 
4 


/ 


50       THE  "  BACK  TO  THE  LAND  "  MOVEMENT 

in  production  and  marketing.  In  short,  the  poultry  grower  must 
learn  the  lesson  from  the  orange  grower  of  California. 

Milk  is  of  all  foods  the  most  ideal — the  one  perfect  "balanced 
ration."  Yet  our  daily  consumption  per  person  is  only  one-half 
a  glass!  When  national  prohibition  arrived,  we  were  spending 
S5.00  a  year  for  the  milk  we  consumed,  and  $8.00  a  year  for  the 
beer  we  drank!  The  coming  importance  of  our  condensed  milk 
trade  is  illustrated  by  the  recent  figures  from  our  Commerce  Re- 
ports. The  condensed  milk  exports  ran  in  value  at  about  $1,000,000 
to  $2,000,000  a  year  for  some  years  prior  to  1915,  according  to 
these  Commerce  Reports.  For  the  year  1915,  the  value  of  con- 
densed milk  exports  was  $6,000,000,  most  of  these  exports  going 
to  Europe.  In  the  year  1918  the  condensed  milk  exports  to  the 
one  port  of  Hong-kong  amounted  to  $3,611,500,  indicating  the 
tremendous  increase  in  the  use  of  this  food  by  the  Chinese. 

Cheese  is  a  staple  article  of  diet  in  foreign  lands,  being  in  all 
respects  a  wholesome  and  cheap  food.  Yet  our  daily  consumption 
of  cheese  is  only  one  one-hundredth  of  a  pound  per  person.  Con- 
densed milk,  fermented  milk,  and  the  various  forms  of  milk  by- 
products suggest  the  possibility  of  developing  an  immense  and 
profitable  market  here. 

Tobacco. — In  tobacco  we  are  spending,  according  to  Harvey 
W.  Wiley,  $1,200,000,000  a  year.^  This  is  twice  as  much  as  is 
spent  for  butter,  condensed  milk,  and  cheese.  Some  shifting  of 
demand  is  possible  here.  In  such  case,  however,  the  tobacco 
farmer,  would  need  to  shift  his  production  to  meet  the  change 
in  demand. 

Jam. — Pratt  tells  us  that  the  English  farmers  when  America 
and  Canada  ruined  the  wheat  market  for  them,  turned  to  more 
specialized  foods.  Jam  is  one.  The  acreage  in  fruit  trees  increased 
to  three  hundred  thousand  acres — an  increase  of  sixty-three  per 
cent  in  thirty  years.  In  America  many  of  the  farmers'  apples, 
peaches,  pears,  etc.,  rot  on  the  ground.  How  much  jam  could, 
for  instance,  New  York  City  alone  consume?  Doctor  Howe  tells 
us  that  New  York  is  supporting  commercialized  leisure  and  amuse- 
ments to  the  extent  of  eleven  thousand,  five  hundred  saloons, 
eight  hundred  dance  halls,  and  six  hundred  motion  picture  shows, 
with  an  estimated  expenditure  on  the  people's  part  of  $100,000,000 
a  year.io  This  merely  illustrates  the  strength  of  market  demand 
for  those  things  which  the  people  happen  to  want  or  are  educated 

8  Good  Housekeeping,  Jan.  1916,  p.  92. 

^°  Howe,  Modern  City  and  its  Problems,  p.  307  (published  in  1915). 


) 


QUESTIONS  ON  THE  TEXT  51 

to  want  by  successful  advertising.    Demand  for  food  products  is     \ 
capable  of  almost  unlimited  expansion,  provided  the  food  article 
is  low  in  price,  and  of  standardized  grade  and  quality  and  pack 
and  the  demand  is  carefully  cultivated. 

The  city  population  is  increasing  three  times  as  fast  as  the 
country  population.  This  table  from  the  census  (where  every 
place  of  fewer  than  twenty-five  hundred  inhabitants  is  considered 
rural)  illustrates  this  tendency. 

Increase  in  Population,  Rural  and  Urban,  by  Per  Cent^. 

1880-1890  1890-1900  1900-1910 

Rural 13.7 12.1 11.2 

Urban 54.4 35.5 34.8 

The  average  size  of  farms  for  the  whole  United  States  shows 
little  if  any  tendency  to  decrease.    Here  are  the  figures:  • 

Average  Size  of  Farms,  U.  S. 

1880 133.7  acres  1900 146.2  acres 

1890 136.5  acres  1910. 138,1  acres 

The  size  of  farms  in  the  old,  well-established  farming  section 
(Ohio,  Indiana,  Illinois,  Iowa,  Missouri,  Kansas)  shows  a  gradual 
increase,  as  given  in  the  following  table: 

Size  of  Farms  in  Six  Farming  States. 

1880 124.3  acres  1900 136.9  acres 

1890 130.7  acres  1910 140.3  acres 

And  in  four  of  these  six  states  the  rural  population  showed  a 
decrease  in  the  decade  1900  to  1910,  while  the  urban  population 
in  all  states  in  the  union  showed  an  increase.  Hence  we  see  that 
the  problem  of  increasing  the  rural  population  and  reducing  the 
size  of  the  farm  is  a  problem  that  is  not  being  solved. 

QUESTIONS  ON  THE  TEXT 

1.  What  according  to  many,  is  this  Republic's  ideal  landowning  system? 

2.  State  and  explain  Jefiferson's  ideal. 

3.  Is  the  drift  of  population  back  to  or  away  from  the  land? 

4.  State  in  full  the  arguments  for  small  farms  as  given  by  Laing. 

5.  Give  the  views  of  Arthur  Young;  of  John  Stuart  Mill. 

6.  State  the  findings  of  the  Wilson- Wallace  Report. 

7.  State  in  detail  the  position  of  Pratt,  especially  his  comments  on  Denmark. 

8.  Give  von  Engelken's  picture  of  German  farming. 

9.  Describe  the  situation  in  Austraha;  in  New  Zealand. 

10.  State  the  problem  confronting  the  United  States. 

11.  Show  relation  of  size  of  land  holdings  to  overproduction^     Quote  Le 

Grande  Powers.    Discuss  flexibiUty  of  demand.    Illustrate. 

12.  Quote  G.  Harold  Powell  on  the  overproduction  problem.    Show  the  sig- 

nificance of  "savings"  rather  than  "profits."    Show  the  place  of  adver- 
tising in  this  connection. 

13.  Cite  evidence  to  show  where  specialized  farming  tends  to  prevail  and 

where  diversified  farming  tends  to  prevail. 


52       THE  "  BACK  TO  THE  LAND  "  MOVEMENT 

14.  What  are  the  usual  arguments,  from  the  sdcial  standpoint,  against  the 

big  farm?    Quote  big  farmers  on  this  point. 

15.  Why  is  the  nature  of  the  rural  population  of  such  vast  importance  to  the 

country  as  a  whole? 

16.  Compare  the  sanitary  conditions  of  city  and  country,  as  evidenced  by  the 

military  draft. 

17.  What  economic  law  will,  in  the  end,  determine  the  size  of  farms? 

18.  State  the  findings  of  the  following  "Surveys":  Chester  County;  Nebraska 

survey. 

19.  Quote,  with  comment,  the  statement  in  the  Weekly  News  Letter  of  the 

Department  of  Agriculture  concerning  renting  versus  buying  a  farm. 

20.  Show  significance  of  competition  question  in  agriculture. 

21.  Would  a  system  of  smaller  holdings  bring  in  harmful  competition? 

22.  Show  possibilities  of  increased  consumption  of  farm  products,  particularly 

milk  and  milk  products,  fruit. 

23.  Cite  statistics  showing  relative  rates  of  increase  of  city  and  rural  popula- 

tion; of  changes  in  average  size  of  farms.    Is  the  rural  population  in- 
creasing?   Is  the  size  of  farms  getting  smaller? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Give  an  account  of  the  strip  system  of  land  holdings  in  Europe. 

2.  Is  Danish  landholding  a  type  of  prosperity  or  lack  of  prosperity? 

3.  Should  the  farmer  "specialize"  or  "diversify"? 

4.  Would  "cheap  food,"  supphed  by  a  so-called  peasant  class  of  farmers, 

be  a  benefit  or  a  curse  to  the  Republic? 

5.  What  is  the  fallacy,  if  any,  in  Jefferson's  views  of  a  rural  versus  an  urban 

population? 

6.  What  is  a  correct  land  poHcy  for  the  United  States?    Do  we  have  any 

land  policy  at  the  present  time?    If  so,  what  is  it? 

REFERENCES 

1.  Johnson,  O.  R.:  "Big  Farms  or  Little  Farms — ^Which?"  Farm  Life, 
Nov.,  1916. 

2.  Farming's  Future.    Editorial,  Farm,  Stock  and  Home,  Sept.  1,  1916. 

3.  For  conditions  in  Europe,  Asia,  Africa,  Austraha,  South  America, 
Mexico,  see  publications  of  International  Institute  of  Agriculture,  Rome, 
Italy,  particularly  International  Review  of  Agricultural  Economics, 

4.  For  brief  comment  on  current  conditions  and  activities  in  all  parts  of 
the  world,  see  the  daily  Commerce  Reports,  issued  by  the  Department  of 
Commerce,  Washington,  D.  C. 

5.  Many  books  dealing  with  the  problems  of  land  settlement,  closer  settle- 
ment, size  of  holdings,  etc.,  have  appeared  in  recent  years.  Hence  the  follow- 
ing Ust  deals  chiefly  with  the  older  pubhcations:  Young,  Arthur,  "Travels 
in  France";  "Land  Tenure,"  Cobden  Club  Essays;  Kay,  Joseph,  "Free  Trade 
in  Land";  Sagerson,  George,  "History  of  Land  Tenures  and  Land  Classes 
in  Ireland";  Pratt,  E.  A.,  "The  Transition  in  Agriculture." 

APPENDIX 

Migration  from  Denmark  to  the  United  States,  Compared  with  Similar  Migration 

from  the  Netherlands  and  Belgium,  showing  Relatively  High  Per  Cent  of 

Danish  Migration. 

Per  cent  of 
Foreign  born      total  popula- 
Population       in  U.  S.  1910,     tion  migrated 
born  in —         to  the  United 
States 

Denmark 2,775,076  181.621  6.5 

Netherlands 6,114,302  120,053  2.0 

Belgium 7,571,387  49,397  .6 


CHAPTER  V 

LAND  TENURE 

Introductory. — Many  changes  are  going  on  in  the  United 
States  in  respect  to  tenancy,  mortgages,  and  size  of  farms.  And  yet 
there  is  very  little  agreement  as  to  the  significance  of  these  changes. 

This  may  be  illustrated  by  a  few  quotations.  For  instance,  at 
a  recent  meeting  of  the  New  York  State  Agricultural  Society,  one 
prominent  gentleman  spoke  as  follows: 

"The  heavy  drain  upon  the  country  for  its  best  blood  to  what  seemed  more 
attractive  life  m  the  city  has  left  many  fathers  and  mothers  alone  at  an  age 
when  they  were  no  longer  fitted  to  carry  the  burden  of  the  farm.  Hard  work 
in  early  life  had  made  the  day  of  retirement  to  the  local  town  look  bright.  And 
the  renter  took  his  place.  Now  the  so-called  tenant  system  is  in  the  minds 
of  men  a  symbol  of  a  degenerated  agriculture,  and  I  must  confess  that  it  has 
as  a  rule  been  true.  The  facts  are  that  farm  rental  is  no  more  degenerate  in 
principle  than  the  ownership  of  a  building  by  one  man  and  its  occupancy  by 
another;  the  tenant  in  some  way  having  paid  the  owner  of  the  buildmg  a  fair 
value  for  its  use.  We  have  deplored  tenantry  and  prayed  for  the  day  when 
prosperity  would  again  come  to  the  open  country  and  the  owner  would  become 
the  occupant  of  the  land.  I  venture  a  prophecy  that  the  millennium  will  never 
come  and  furthermore  that  tenantry  may  increase.  Tenantry  leaves  a  bad 
taste,  not  because  the  thing  is  wrong,  but  because  it  has  developed  through 
unfortunate  causes  .  .  .  The  system  of  tenantry  is  here  because  the  farm  as 
a  business  wall  not  pay  cash  for  the  labor  and  leave  a  balance." 

The  speaker  is  interrupted  and  interrogated  as  follows: 

"I  want  to  ask  Mr.  Cook  one  question :  Does  he  think  that  our  descendants 
will  stand  for  a  thing  that  his  ancestors  and  mine  left  Europe  because  of — 
tenantry?  Never,  as  long  as  we  are  Americans,  will  tenantry  come  into  this 
great  and  glorious  country." 

Mr.  Cook  repHes: 

''The  trouble  is,  it  is  here  now.  Come  out  into  the  country  and  see  how 
many  tenant  farmers  we  have  .  .  .  We  have  tenantry,  and  we  are  going  to 
have  it,  and  let  us  undertake  to  improve  rather  than  destroy,  as  we  cannot 
get  rid  of  it."  ^ 

Charles  Stelzle,  in  reviewing  the  returns  of  the  1910  census, 
takes  this  somewhat  cheerful  view  of  the  situation: 

"While  the  population  of  the  United  States  as  a  whole  increased  21  per 
cent  during  the  past  ten  years,  the  rural  population  increased  only  11.2  per 
cent.  The  increase  in  the  number  of  farms  during  the  period  was  10.9  per  cent. 
The  value  of  the  farm  property  increased  100.5  per  cent,  but  the  greater  part  of 
this  extraordinary  increase  was  in  the  land  itself,  the  value  of  which  increased 

^  Bulletin  47.  Proceedings  of  the  Seventy-third  Annual  Meeting  of  the 
N.  Y.  State  Agricultural  Society.    Albany,  1913,  pp.  1265-1268. 

53 


54  LAND  TENURE 

118.1  per  cent.    The  average  size  of  farms  decreased  from  146.2  acres  to  138.1 
acres.    The  tendency  is  slowly  but  surely  towards  the  smaller  farm."  ^ 

These  same  figures  are  interpreted  in  quite  a  different  manner 
by  students  with  socialistic  tendencies.  Thus  A.  M.  Simons  writes 
of  them  as  follows : 

"If  we  disregard  cotton,  then  nearly  one-half  of  the  agricultural  staples 
of  the  United  States  are  produced  within  500  miles  of  Chicago. 

"Census  bulletins  are  now  available  for  three  typical  states  in  this  terri- 
tory. These  bulletins  show  the  same  tendencies  in  every  state.  It  is  therefore 
certain  that  what  is  true  of  these  will  hold  good  of  this  entire  section,  and  prob- 
ably of  a  much  wider  area.  The  three  states  are  Indian^,  Illinois,  and  Iowa. 
In  all  of  these  the  average  number  of  acres  per  farm  is  increasing.  During  the 
last  ten  years  the  average  area  of  an  Iowa  farm  has  increased  from  151  to  156 
acres;  of  Indiana,  from  97  to  98;  and  of  Illinois,  from  124  to  129  acres. 

"This  increase  in  size  becomes  still  more  evident  when  more  closely 
examined.  In  all  three  of  these  states  the  largest  increase  in  the  number  of 
farms  has  been  in  that  of  the  httle,  intensivelv  cultivated  garden  patch  of 
less  than  ten  acres.  This  would  naturally  tend  to  show  a  great  decrease  in 
the  size  of  farms,  were  it  not  offset  bj^  the  fact  that  the  second  group  of  farms 
to  show  a  rapid  increase  in  number  is  that  of  those  containing  between  175 
and  500  acres. 

"In  all  three  of  these  states  the  area  embraced  in  farms  of  between  20 
and  100  acres  shows  a  considerable  decrease  during  the  last  ten  years.  In 
Illinois,  which  in  all  respects,  shows  a  more  advanced  stage  of  development 
than  any  of  the  others,  this  decrease  extends  to  farms  of  less  than  175  acres. 
But  it  is  the  small  farmer,  owning  between  40  and  160  acres,  that  has  always 
been  pointed  out  proudly  as  the  backbone  of  American  agriculture,  the  great 
conservative  element  in  our  society,  the  sohd  middle  class  farmer  for  whose 
salvation  the  pohtician  loves  to  stand.  Apparently,  that  '  backbone '  is 
being  broken  ... 

"The  other  type,  whose  importance  is  rapidly  increasing,  is  that  on  which 
it  is  possible  to  utihze  the  most  efficient  machinery.  Hitherto  this  size  has 
been  hmited  by  the  system  of  using  animal  power.  With  the  appearance  of 
the  mechanical  tractor  these  farms  will  at  first  gain  in  importance,  and  then, 
in  all  probability,  give  way  to  a  much  larger  size.  The  application  of  the  power 
to  farming  wiU  at  once  increase  the  size  of  the  farm  unit  which  can  profitably 
be  cultivated  under  a  single  management,  and  it  is  safe  to  say  that  the  next 
census  will  show  a  great  acceleration  of  all  tendencies  toward  concentration. 

"Another  set  of  facts  evident  in  all  three  of  these  states  lends  support 
and  emphasis  to  the  conclusion  that  we  have  entered  upon  a  new  era  of  con- 
centration in  farming  throughout  this  territory.  In  spite  of  the  rise  in  value 
of  farm  products,  in  spite  of  the  multitude  of  garden  patches  near  cities  and 
all  the  general  results  of  the  'back  to  the  farm'  movement,  there  has  been  a 
decided  decrease  in  the  total  number  of  farms.  In  1900  those  three  states 
contained  714,670  farms;  by  1910  these  had  shrunk  to  684,410. 

"But  whUe  the  farms  had  grown  larger  in  size  and  fewer  in  number,  their 
value  per  acre  had  grown  enormously.  The  farms  of  Indiana  had  increased 
in  value  from  $32  to  $62  per  acre;  those  of  Iowa  from  $36  to  $83;  and  of  Illinois 
from  $55  to  $108  per  acre.  The  significance  of  these  figures  is  seen  when  we 
apply  them  to  the  farm  as  a  unit.  We  then  see  that  the  average  value  of  a 
farm  in  Indiana  has  grown  from  $4,410  to  $8,396;  in  Illinois  from  $7,588  to 
$15,505;  and  in  Iowa  from  $8,023  to  $17,259.  Combining  these  facts  multi- 
pHes  their  importance  because  they  all  tend  in  the  same  direction. 

2  United  Mine  Workers'  Journal,  October  10,  1912,  p.  3. 


TENANCY  55 

"A  decreasing  number  of  farms,  an  increasing  size,  requiring  more  expen- 
sive equipment,  and  this  more  than  doubling  of  values,  means  that  an  impas- 
sable barrier  has  been  erected  between  the  landless  farmer  and  the  instruments 
essential  to  his  existence. 

"It  is  scarcely  necessary  to  turn  to  the  section  of  the  census  bulletin  that 
deals  with  tenantry  to  be  assured  that  such  a  condition  would  separate  pro- 
ducer and  possession.  In  each  of  these  states  there  has  been  a  steady  increase 
in  the  number  of  farms  operated  by  tenants  for  the  last  thirty  years. 

"The  one  big  fact  that  stands  out  from  an  examination  of  the  agricultural 
situation  in  the  north  and  south,  is  that  it  is  about  time  to  quit  talking  about 
maintaining  the  small  farmer  in  the  ownership  of  his  farm.  Capitalism  is 
abohshing  that  condition  in  agriculture  as  it  already  has  in  industry."  ^ 

Very  clearly  all  is  not  well  with  agriculture  in  the  United 
States.  Thoughtful  persons  are  pointing  out  changes  in  our  land 
tenure  situation  which  are  fraught  with  very  real  and  very  immi- 
nent dangers.  Let  us  examine  in  detail  the  Tenancy  and  the 
Mortgage  questions,  and  then  the  two  or  three  other  matters 
involved  in  these  two  problems. 

Tenancy. — Our  theory  of  a  sound  agriculture  has  quite  gener- 
ally been  that  every  man  should  dwell  under  his  own  vine  and  fig 
tree.  And  this  happy  situation  actually  existed  for  a  short  while 
at  the  beginning  of  our  great  Repubhc.  But  now,  at  a  progressively 
increasing  rate,  we  are  departing  from  it.  And  the  strange  thing 
in  the  situation  is  that  our  powerful  neighbor,  Canada,  forming 
with  us  an  ethnological  and  economic  unit,  is  moving  in  the  oppo- 
site direction.  Renters  are  few  in  Canada,  and  are  becoming 
fewer.  Renters  are  many  in  the  United  States,  and  are  fast 
becoming  the  majority  of  occupiers  of  farms. 

Putting  side  by  side  the  census  figures  from  each  country,  the 
situation  is  very  vivid. 

Farm  Tenancy  in  Canada  and  the  United  States.    Per  Cent  of  Total  Occupiers 

Who  are  Tenants 
Canada  United  States 


Year 

Per  cent 

Year 

Per  cent 

1891 

1901 

1911 

15.42 

12.90 

11.40 

1880 

1890 

1900 

1910 

25.6 

28.4 

35.3 

37.0 

The  fact  is  well  estabhshed  that  tenant  farming  is  increasing 
in  the  United  States.  In  a  few  counties  .it  exceeds  90  per  cent  of 
all  the  farms.  The  conclusion  is  also  reached  by  our  best  students 
of  the  problem  that  farm  tenancy  will  continue  to  increase  in  the 
United  States  in  the  future.  The  position  of  the  Federal  govern- 
ment investigators  on  this  subject  is  very  interesting.     Thus  we 

3  Brauerei  Arbeiter  Zeitung,  May  18,  1912,  p.  2,  "  Recent  Tendencies  in 
Agriculture,"  by  A.  M.  Simons. 


56 


LAND  TENURE 


find  in  the  Report  issued  by  Mr.  Spillman,  who  was  in  charge  of 
the  office  of  farm  management  in  1912,  this  interesting  statement: 
*'The  lack  of  future  opportunity  for  taking  up  desirable  public 
lands  in  our  western  states  and  the  consequent  general  rise  in  the 
price  of  farm  lands  all  over  the  country  has  resulted  in  an  increase 
in  tenant  farming,  especially  in  those  sections  where  land  values 
have  risen  to  the  point  at  which  it  is  exceedingly  difficult  for  the 
purchaser  of  a  farm  to  meet  both  living  expenses  and  interest  on 
his  indebtedness  and  also  make  payments  on  the  principal.    It  is 


Fig.   10". — Farming  by  a  tenant. 

hardly  to  be  doubted  that  tenant  farming  will  further  increase  in 
this  country  and  that  ultimately  the  land  will  be  owned  by  the 
wealthier  classes  and  be  farmed  by  tenants  with  moderate  capital." 
The  question  naturally  presents  itself.  What  will  be  the  social  or 
economic  significance  of  an  increase  in  farm  tenancy?  We  have 
conclusions  on  this  subject  presented  to  us  in  a  great  number  of 
rural  life  surveys  made  by  various  institutions  such  as  the  Depart- 
ment of  Church  and  Country  Life,  Board  of  Home  Missions  of 
the  Presbyterian  Church  of  this  country,  by  various  State  Uni- 
versities, and  by  various  other  institutions  and  individuals.  One 
such  survey,  speaking  of  northwestern  Ohio,  says:  "Tenancy 
may  not  be  a  curse  to  agriculture  and  the  country  life,  but  under 
the  system  of  land  tenure  prevalent  throughout  the  most  of  the 


TENANCY 


57 


United  States  it  usually  is."  In  the  section  covered  by  this  report 
the  average  length  of  time  that  a  tenant  stays  upon  the  same 
farm  is  two  and  one-half  years.  This  makes  not  only  frequent 
removals  but  also  the  constant  effort  on  the  part  of  the  tenants  to 
take  from  the  soil  as  much  as  possible  while  giving  back  to  it  as 
little  as  possible  (Figs.  10  and  11).  Such  a  process  if  continued 
must  result  in  soil  impoverishment  and  deterioration.  Very  few 
of  the  renters  succeed  in  acquiring  farms  of  their  own.  For  the 
most  part  they  remain  a  floating,  discontented  element  in  the 
population.  They  'are  the  marginal  members  of  the  community, 
and  their  increasing  numbers  in  northern  Ohio  constitutes  not 


Fig.   11. — When  the  owner  farms 


only  a  serious  agricultural  question,  but  a  more  serious  social  and 
religious  problem.  The  United  States  Industrial  Relations  Com- 
mission probed  the  causes  of  unrest  in  the  South  and  conducted 
hearings  there.  The  Survey  Magazine  of  New  York  speaks  of 
these  investigations  in  these  words: 

"About  a  thousand  pages  of  testimony  was  taken  in  the  five  days  of  the 
hearings.  A  study  of  this  testimony  will  reveal  a  remarkable  coincidence  of 
statement  with  regard  to  the  actual  conditions,  and  considerable  difference  of 
opinion  as  to  what  remedies  should  be  adopted. 

"It  was  generally  admitted  that  a  remarkable  concentration  in  the  owner- 
ship of  land  is  taking  place.  With  it  are  the  attendant  evils  of  a  rising  absentee 
landlord  class  and  a  descending  tenant  farmer  class.  It  was  shown  that  this 
concentration  of  ownership  is  aided  by  the  farmers  moving  to  town,  by  the 
credit  system,  by  speculation  and  holding  of  land,  etc. 

"The  growth  of  landlordism  has  been  aided  by  the  one-crop  system,  which 
in  the  South,  makes  it  difficult  for  tenants  to  rise  to  the  cash  basis,  and  often 
impossible  for  them  to  become  home  owners.     Excessive  valuations  of  farm 


58  LAND  TENURE 

land  have  made  the  tenant's  lot  a  harder  one.  Proprietors  of  large  tracts  have 
also  used  indirect  methods  of  pressure  to  force  smaller  owners  to  sell  their 
holdings.  Seasonal  depressions  of  crop  prices  throw  thousands  of  mortgaged 
home  owners  back  into  the  ranks  of  tenants.  Depleted  farm  hfe  accelerates 
the  trend. 

"The  witnesses  testified  to  considerable  friction  between  landlords  and 
tenants  in  this  area.  Oppressive  tactics  of  landlords,  in  the  form  of  unwar- 
ranted evictions,  use  of  force  to  intimidate  renters,  arbitrary  requirements 
in  the  matter  of  cropping  contracts,  threats  to  raise  the  rents  where  land  taxes 
were  involved  if  elections  should  carry  in  favor  of  the  tax,  and  'keeping  the 
tenants  on  the  move'  when  their  pohtical  convictions  might  differ  from  the 
landlord's  were  among  the  injustices  named.  Some  of  these  were  considered 
general;  others  much  less  so. 

"Tenants  have  been  known  to  destroy  the  landlords'  property  and  to 
foul  the  land  by  sowing  Johnson  grass,  a  noxious  growth  among  cotton  and 
grain  crops.  They  have  held  mass-meetings  of  protest  against  rises  in  rent. 
They  have  held  meetings  for  the  purpose  of  declaring  moratoriums.  Threats 
of  violence,  and  even  the  whipping  of  other  tenants  who  had  accepted  increases 
in  rents  have  been  resorted  to. 

"It  was  a  great  day  for  the  radical  tenants  when  their  representatives 
were  permitted  to  take  the  stand  and  enter  upon  the  records  their  side  and 
their  story  of  the  renters'  movement.  From  the  mass  of  evidence  introduced, 
some  general  truths  were  gleaned.  Discontent  of  the  producing  classes  has 
been  growing  in  the  Southwest  for  several  years.  It  changed  into  a  class- 
conscious  movement  in  1911  when  the  Renters'  Union  of  America  was  founded. 
This  organization  followed  close  upon  a  series  of  disturbances  in  Oklahoma 
and  Texas.  The  cause  of  the  disturbances  appeared  to  he  in  the  movement  on 
the  part  of  the  landlords  to  raise  the  rents  above  the  traditional  one-third  of 
the  grain  and  one-fourth  of  the  cotton  for  the  share  of  the  landlord  when  he 
furnishes  only  land  and  house. 

"Notwithstanding  this  effort  at  resistance  the  movement  to  increase  the 
landlord's  share  of  the  crops  has  been  steady,  and  several  thousand  tenants 
have  been  required  to  pay  the  landlords  as  high  as  one-third  of  the  cotton 
instead  of  one-fourth,  or  to  pay  cash  rent  in  addition  to  the  share  rent.  A  few 
landlords  have  been  able  to  charge  as  high  as  40  per  cent  of  the  crop  for 
their  share. 

"It  was  the  agitation  of  the  land  question  by  this  organization  that  un- 
doubtedly made  it  possible  for  James  E.  Ferguson  to  become  the  present 
governor  of  Texas.  He  swept  aside  all  opposition  and  was  elected  by  an  over- 
whelming vote.  One  of  the  main  planks  in  the  governor's  platform  was  to 
restrict  the  landlords'  share  of  the  rents  by  law.  The  governor  testified  that 
the  rent  plank  was  of  great  assistance  in  making  him  governor.  On  the  stand 
he  defended  this  plank,  which  has  since  become  a  law.  He  maintained  that  the 
cash  system  of  renting  land  in  the  Southwest  is  unfair,  because  it  places  the 
burden  of  risk  upon  the  tenant  and  often  bankrupts  him  in  the  attempt  to 
pay  the  landlord's  share  .  .  . 

"It  was  urged  that  the  holdings  of  land  for  speculative  purposes  handicaps 
any  effort  to  break  the  strangle  hold  of  landlordism.  It  was  interesting  to 
note  that  some  witnesses  looked  to  the  advent  of  corporation  farming  as  the 
most  efficient  farming  of  the  future.  It  was  shown  how  the  corporation  or  the 
large  owner  tends  toward  the  factory  idea  of  production.  Should  large  farms 
be  conducted  on  system  methods  by  big  capital,  undoubtedly  many  tenant 
farmers  of  to-day  would  become  wage  hands. 

"The  Coleman-Fulton  Pasture  Company  was  pointed  to  as  an  example 
of  the  capital  system.  This  company,  which  is  controlled  by  the  Charles  P. 
Taft  interests,  is  a  huge  industrial  enterprise  of  80,000  acres  on  which  Hves  a 
population  of  4,000  souls.    This  company,  through  its  associated  corporations 


f 

TENANCY  59 

and  partnerships,  operates  ranch  land  and  farm  land,  cotton  gins,  stores, 
lumber  yards,  oil  mill,  packing-house  plant,  electric  light  plant,  telephone, 
water  works,  and  other  enterprises.  By  means  of  experimentation  and  cost- 
cutting  systems  it  has  been  able  to  reduce  considerably  the  cost  of  operating 
farm  land.  It  is  able  to  command  labor  on  its  farms  at  eighty  cents  per  day. 
And  the  laborers  board  themselves!"  * 

The  final  report  of  the  Commission  on  Industrial  Relations 
summed  up  its  findings  on  the  Land  Question  in  these  words: 

''It  was  obviously  impossible  for  the  commission  to  attempt  a  detailed 
investigation  of  Agricultural  conditions,  but  because  of  the  very  immediate 
bearing  of  the  land  question  on  industrial  unrest,  it  was  felt  necessary  to  make 
as  thorough  an  investigation  as  possible  of  the  phases  which  seemed  to  have 
the  most  direct  bearing  on  our  general  problem.  The  phases  selected  for  dis- 
cussion were,  first,  the  concentration  of  land  ownership  as  shown  by  existing 
statistics;  second,  the  problem  of  seasonal  and  casual  agricultural  labor;  third, 
the  increase  and  change  in  the  character  of  farm  tenancy;  and,  fourth,  the 
introduction  of  industrial  methods  into  agriculture  through  the  development 
of  corporations  operating  large  tracts  of  land.  The  findings  and  recommenda- 
tions with  reference  to  the  concentration  of  ownership  and  the  problems  of 
seasonal  labor  are  set  forth  elsewhere.  At  this  point  it  is  desired  to  present 
the  results  of  the  investigations  of  tenancy  and  agricultural  corporations. 

''As  a  result  of  these  investigations  the  following  conclusions  are  fully 
justified: 

"  1.  Tenancy  in  the  Southwestern  States  is  already  the  prevailing  method 
of  cultivation  and  is  increasing  at  a  very  rapid  rate.  In  1880  Texas  had  65,468 
tenants'  families,  comprising  37.6  per  cent  of  all  farms  in  the  State.  In  1910 
tenant  farmers  had  increased  to  219,571  and  operated  53  per  cent  of  all  farms 
in  the  State.  Reckoning  on  the  same  ratio  of  increase  that  was  maintained 
between  1900  and  1910  there  should  be  in  Texas  at  the  present  year  (1915)  at 
least  236,000  tenant  farmers.  A  more  intensive  study  of  the  field,  however, 
shows  that  in  the  82  counties  of  the  State  where  tenancy  is  highest  the  per- 
centage of  tenancy  will  approximate  sixty. 

"For  Oklahoma  we  have  not  adequate  census  figures  so  far  back,  but  at 
the  present  time  the  percentage  of  farm  tenancy  in  the  State  is  54.8,  and  for 
the  47  counties  where  the  tenancy  is  highest  the  percentage  of  tenancy  is  68.13. 

"2.  Tenancy,  while  inferior  in  every  way  to  farm  ownership  from  a  social 
standpoint,  is  not  necessarily  an  evil  if  conducted  under  a  system  which  pro- 
tects the  tenants  and  assures  cultivation  of  the  soil  under  proper  and  economi- 
cal methods,  but  where  tenancy  exists  under  such  conditions  as  prevail  in  the 
Southwest,  its  increase  can  be  regarded  only  as  a  menace  to  the  Nation. 

"  3.  The  prevailing  system  of  tenancy  in  the  Southwest  is  share  tenancy, 
under  which  the  tenant  furnishes  his  own  seed,  tools,  and  teams  and  pays  the 
landlord  one-third  of  the  grain  and  one-fourth  of  the  cotton.  There  is,  how- 
ever, a  constant  tendency  to  increase  the  landlord's  share  through  the  payment 
either  of  cash  bonuses  or  of  a  higher  percentage  of  the  product.  Under  this 
system  tenants  as  a  class  earn  only  a  bare  living  through  the  work  of  themselves 
and  their  entire  families.  Few  of  the  tenants  ever  succeed  in  laying  by  a  sur- 
plus. On  the  contrary,  their  experiences  are  so  discouraging  that  they  seldom 
remain  on  the  same  farm  for  more  than  a  year,  and  they  move  from  one  farm 
to  the  next,  in  the  constant  hope  of  being  able  to  better  their  condition.  With- 
out the  labor  of  the  entire  family  the  tenant  farmer  is  helpless.  As  a  result, 
not  only  is  his  wife  prematurely  broken  down,  but  the  children  remain 
uneducated  and  without  the  hope  of  any  condition  better  than  that  of  their 
parents.    The  tenants  having  no  interest  in  the  results  beyond  the  crops  of  a 

'  The  Survey,  April  17,  1915,  pp.  63-64  (New  York  City). 


60  LAND  TENURE 

single  year,  the  soil  is  being  rapidly  exhausted  and  the  conditions,  therefore, 
;  tend  to  become  steadily  worse.  Even  at  present  a  very  large  proportion  of 
J  the  tenants'  families  are  insufficiently  clothed,  badly  housed,  and  underfed. 
Practically  all  of  the  white  tenants  are  native  born.  As  a  result  of  these  condi- 
tions, however,  they  are  deteriorating  rapidly,  each  generation  being  less 
efficient  and  more  helpless  than  the  preceding  one. 

"4.  A  very  large  proportion  of  the  tenants  are  hopelessly  in  debt  and  are 
charged  exorbitant  rates  of  interest.  Over  95  per  cent  of  the  tenants  borrow 
from  some  source,  and  about  75  per  cent  borrow  regularly  year  after  year. 
The  average  interest  rate  on  all  farm  loans  is  10  per  cent,  while  small  tenants 
in  Texas  pay  15  per  cent  or  more.  In  Oklahoma  the  conditions  are  even 
worse,  in  spite  of  the  enactment  of  laws  against  usury.  Furthermore,  over 
80  per  cent  of  the  tenants  are  regularly  in  debt  to  the  stores  from  which  they 
secure  their  supphes,  and  pay  exorbitantly  for  this  credit.  The  average  rate 
of  interest  on  store  credit  is  conservatively  put  at  20  per  cent  and  in  many 
cases  ranges  as  high  as  60  per  cent. 

"5.  The  leases  are  largely  in  the  form  of  oral  contracts  which  run  for 
only  one  year,  and  which  make  no  provision  for  compensation  to  the  tenant 
for  any  improvements  which  may  be  made  upon  the  property.  As  a  result, 
tenants  are  restrained  from  making  improvements,  and  in  many  cases  do  not 
properly  provide  for  the  upkeep  of  the  property. 

"6.  Furthermore,  the  tenants  are  in  some  instances  the  victims  of  oppres- 
sion on  the  part  of  landlords.  This  oppression  takes  the  form  of  dictation  of 
character  and  amount  of  crops,  eviction  without  due  notice,  and  discrimination 
because  of  personal  and  political  convictions.  The  existing  law  provides  no 
recourse  against  such  abuses. 

''  7.  As  a  result  both  of  the  evils  inherent  in  the  tenant  system  and  of  the 
occasional  oppression  by  landlords,  a  state  of  acute  unrest  is  developing  among 
n;^  the  tenants  and  there  is  clear  indications  of  the  beginning  of  organized  resist- 
ance which  may  result  in  civil  disturbances  of  a  serious  character. 

"8.  The  situation  is  being  accentuated  by  the  increasing  tendency  of  the 
landlords  to  move  to  the  towns  and  cities,  relieving  themselves  not  only  from 
\  aU  productive  labor,  but  from  direct  responsibility  for  the  conditions  which 
develop.  Furthermore,  as  a  result  of  the  increasing  expenses  incident  to  urban 
life  there  is  a  marked  tendency  to  demand  from  the  tenant  a  greater  share  of 
the  products  of  his  labor. 

''9.  The  responsibihty  for  the  existing  conditions  rests  not  upon  the  land- 
lords, but  upon  the  system  itself.  The  principal  causes  are  to  be  found  in 
the  system  of  short  leases,  the  system  of  private  credit  at  exorbitant  rates, 
the  lack  of  a  proper  system  of  marketing,  the  absence  of  educational  faciUties, 
and  last  but  not  least,  the  prevalence  of  land  speculation. 

"10.  A  new  factor  is  being  introduced  into  the  agricultural  situation 
through  the  development  of  huge  estates  owned  by  corporations  and  operated 
by  salaried  managers  upon  a  purely  industrial  system.  The  labor  conditions 
on  such  estates  are  subject  to  grave  criticism.  The  wages  are  extremely  low, 
80  cents  per  day  being  the  prevaihng  rate  on  one  large  estate  which  was 
thoroughly  investigated;  arbitrary  deductions  from  wages  are  made  for  vari- 
ous purposes;  and  a  considerable  part  of  the  wages  themselves  are  paid  in  the 
form  of  coupons,  which  are  in  all  essential  particulars,  the  same  as  the  "scrip" 
which  has  been  the  source  of  such  great  abuse.  Furthermore,  the  communities 
existing  on  these  large  estates  are  subject  to  the  complete  control  of  the 
land-owning  corporation,  which  may  regulate  the  lives  of  citizens  to  almost 
any  extent." 

At  the  third  national  convention  on  Marketing  and  Farm 
Credits  in  Chicago,  1915,  various  speakers  dwelt  on  the  menace 
to  our  political  and  educational  institutions  which  is  even  now 


RENT  CONTRACT  61 

beginning  to  be  apparent  in  connection  with  the  tenant  class  in 
certain  sections  of  this  country.  For  instance,  items  like  the  fol- 
lowing in  the  daily  press  are  becoming  of  greater  frequency  from 
month  to  month: 

"Cape  Girardeau,  Mo.,  Nov.  23. — Five  night  riders  and  two  private 
detectives  were  wounded  in  a  pistol  battle  southwest  of  Clarkton,  Mo.,  near 
here,  early  to-day.  Seven  of  the  night  riders  were  captured  later  after  an  all 
day  chase  by  bloodhounds  and  a  posse. 

"To-night  virtually  every  citizen  of  Clarkton  and  every  land  owner  in 
the  vicinity  is  armed  in  expectation  of  another  attack  by  the  night  riders. 
The  latter  are  a  secret  band  of  tenants  and  farm  laborers  who  have  been  waging 
a  feud-like  war  for  higher  wages  and  lower  food  prices. 

"  Detectives  on  Secret  Mission. — The  struggle  between  tenants  and 
laborers  on  one  side  and  land  owners  and  merchants  on  the  other  has  been  in 
progress  here  for  several  months  and  has  spread  throughout  New  Madrid 
county,  in  southeast  Missouri.  Six  detectives  have  been  camping  secretly  for 
two  weeks  in  a  shack  on  a  swamp  which  is  part  of  the  farm  of  T.  S.  Heisserer, 
wealthy  land  owner  and  banker,  against  whom  the  night  riders  have  centered 
their  attacks  .  .  . 

"Though  called  riders,  the  men  participating  in  night  raids  usually  travel 
afoot,  sometimes  masked.  The  outrages  attributed  to  them  include  arson, 
murder,  blackmailing,  tarring  and  feathering  and  horsewhipping  of  men  and 
women.  Nine  of  such  several  months  ago  were  trapped  at  an  organization  meet- 
ing by  officers  of  the  postal  department,  and  seven  of  these  were  convicted  of 
sending  threatening  letters  through  the  mails  and  were  sent  to  the  federal 
penitentiary  at  Leavenworth,  Kan."  ^ 

The  "1.  W.  W."  (Industrial  Workers  of  the  World)  disturbances 
which  occur  not  only  in  the  east,  but  flare  up  in  our  prairie  sections, 
as  in  Minot,  North  Dakota,  in  1914,  may  be  considered  as  symp- 
toms of  agricultural  unrest. 

The  amount  of  tenancy  in  different  sections  of  the  Union  varies 
greatly.  Tenancy  is  greatest  in  the  South.  It  is  also  great  and 
growing  greater  in  the  strictly  agricultural  states  such  as  Indiana, 
Ohio,  Illinois,  Iowa,  Missouri,  Kansas,  Oklahoma,  and  Nebraska. 
The  table  in  the  appendix  to  this  chapter  will  indicate  correctly 
the  amount  of  tenancy  in  these  sections.  The  actual  condition 
of  tenancy  of  each  state  in  the  Union  as  well  as  changes  for  better 
or  worse  are  also  shown  in  this  appendix. 

Rent  Contract. — The  rent  contract  in  the  United  States  is  of 
two  general  types,  the  cash  rent  and  the  share  rent  type,  and  these 
two  fall  loosely  into  four  systems  of  tenure,  namely;  the  cash 
tenant,  the  share  tenant,  the  share  cropper,  and  the  crop  lien 
system,  all  of  which  are  illustrated  below.  The  significant  feature 
however,  of  each  form  of  rent  contract  is  the  short  time  of  the 
tenure.  In  other  words,  we  do  not  have  a  stability  of  farm  oper- 
ators.   Unhappily  this  holds  true  also  of  farm  owners.    The  one 

5  Des  Moines  Register,  Nov.  24,  1915. 


62  LAND  TENURE 

redeeming  feature  of  farm  tenancy  in  England  and  Scotland,  where 
it  has  apparently  reached  its  perfection,  is  the  long  time  tenure  of 
the  renter.  The  significance  of  our  too  short  time  tenures  is 
brought  out  vividly  in  the  various  surveys  alluded  to  above.  Thus, 
to  quote  from  a  survey  of  Montgomery  County,  Maryland: 

"Speaking  broadly,  it  is  common  experience  that  under  a  system  of  tenan- 
try the  land  is  usually  not  so  well  farmed  as  when  operated  by  its  owners. 
The  tenant  usually  has  but  a  short  lease  on  the  land;  inferior  methods  of  farm- 
ing are  apt  to  be  employed;  the  needs  of  the  soil  are  not  so  carefully  studied 
or  attended  to;  there  is  generally  a  smaller  working  capital;  the  cost  of  opera- 
tion is  somewhat  greater.  In  consequence,  the  property  is  not  kept  up;  the 
fertihty  of  the  soil  is  seldom  increased  or  even  maintained;  and  in  the  long  run, 
the  net  income  is  smaller.  To  have  45  per  cent  of  the  land  operated  under  a  ten- 
ant system  and  to  have  that  system  on  the  increase,  would  thus  seem  to  present 
a  problem  worthy  of  consideration.  The  obvious  solution  would  be  along  the 
line  of  aiding  the  present  operators  to  obtain  the  ownership  of  the  land.  In 
Europe  and  to  a  lesser  extent  in  some  parts  of  the  United  States  this  need  is 
met  by  an  ably  managed  and  extensive  system  of  cooperative  banking. 

"Another  interesting  angle  of  this  question  has  to  do  with  the  length  of 
tenure.  The  average  length  of  tenure  for  all  farms  is  12.4  years.  But  more 
than  half  of  the  farms  and  considerably  more  than  half  of  the  total  acreage 
of  farm  lands,  have  changed  hands  at  least  once  during  the  last  ten  years. 
This  means  an  unstable  element  in  the  population  large  enough  to  cause  con- 
cern. For  all  owned  land,  the  average  term  of  occupancy  is  15  years,  but  for 
land  operated  by  tenants,  the  average  term  of  occupancy  is  only  4  years.  One- 
fourth  of  the  entire  farming  population,  then  is  shifting,  a  fact  which  must 
necessarily  hamper  all  efforts  toward  the  betterment  of  rural  life  conditions 
along  social,  reUgious  and  educational  Unes." 

A  rural  survey  in  one  Tennessee  community  brings  out  this 
situation: 

"Among  the  tenants  63  per  cent  rent  land  from  neighboring  farmers. 
This  land  is  in  many  cases  under  the  direct  supervision  of  the  owner,  who 
designates  what  crops  are  to  be  raised,  and  sees  to  it  that  the  soil  does  not 
become  too  much  worn  out.  In  many  cases  the  renters  although  retaining 
their  independence,  are  thus  virtually  hired  men,  who  are  paid  in  produce 
instead  of  in  cash.  This  is  particularly  the  case  with  the  'share  cropper,' 
who  owns  neither  land  nor  tools,  but  has  tools,  horses  and  seed  furnished  by 
the  owner  of  the  land.  The  cropper  as  a  rule  cultivates  from  20  to  30  acres, 
and  gives  half  the  produce  to  the  owner.  Most  of  the  croppers  are  negroes. 
The  'share  tenant'  or  'renter,'  who  furnishes  his  own  tools  and  horses,  pays 
to  the  owner  one-third  of  the  corn  and  one-fourth  of  the  cotton.  The  cash 
tenant  pays  usually  $4,00  an  acre.  There  are  only  ten  hired  men.  Their 
wages  are  from  seventy-five  cents  to  $1,00  a  day  and  keep." 

There  is  of  course  another  side  to  this  picture.  The  Federal 
government  has  been  quoted  as  accepting  tenancy >s  a  permanent 
institution.  In  line  with  this  belief  the  Federal  government  has 
issued  a  bulletin  entitled,  "A  System  of  Tenant  Farming  and  Its 
Results."  This  bulletin  shows  a  successful  example  of  tenant 
farming  where  the  landlord  has  secured  stability  of  farm  operators. 
An  extended  quotation  is  worth  while  in  this  connection.    Accord- 


RENT  CONTRACT  63 

ingly  we  print  the  following  extract  from  this  report,  which  was 
issued  in  the  year  1911. 

"In  the  older  sections  of  the  eastern  United  States  the  necessity  for  con- 
sidering permanent  types  of  farming  has  long  been  felt  and  much  effort  has 
been  made  to  meet  the  need.  A  very  good  example  of  success  in  solving  this 
problem  along  general  farming  Hnes  is  that  of  a  large  estate  in  eastern  Mary- 
land. This  estate  is  the  more  interesting  because  it  represents  a  system  em- 
bracing 56  tenant  farms  under  one  ownership  that  has  been  in  successful 
operation  for  more  than  30  years.  During  this  period  yields  of  wheat  and  corn, 
which  are  the  principal  crops  grown,  have  been  maintained  and  in  some  cases 
increased.  A  large  number  of  tenants  have  been  on  the  estate  for  more  than 
20  years;  several  have  been  there  for  more  than  30  years,  and  their  sons  have 
succeeded  them. 

"These  facts  show  clearly  that  the  relationship  between  owner  and  tenant 
has  been  satisfactory.  This  is  further  brought  out  from  the  standpoint  of  the 
tenant  by  the  fact  that  many  tenants  have  made  enough  money  by  farming 
on  the  estate  to  buy  farms  of  their  own.  In  several  instances,  however,  they 
are  so  well  satisfied  that  they  continue  as  tenants  and  rent  their  own  farms  to 
some  one  else. 

"On  the  other  hand,  the  estate  itself  is  fairly  well  satisfied.  It  has  been 
able  to  keep  up  the  productiveness  of  the  different  farms  until  many  of  them 
yield  better  than  when  bought.  Attractive  dwellings  and  substantial  barns 
have  been  maintained  on  every  farm,  and  all  the  fields  are  well  fenced  with 
board,  hedge,  or  -wore.  Many  fields  have  been  enlarged  by  clearing  waste 
places  and,  made  more  productive  by  underdraining  with  tile.  Every  farm  is 
clean,  neat  and  attractive  in  appearance. 

"The  returns  from  the  farm  have  paid  for  aU  these  improvements,  have 
paid  all  taxes,  and  are  now  bringing  in  to  the  estate  more  than  5  per  cent 
interest  on  the  total  investment.  Some  of  the  farms  have  nearly  trebled  in 
value  in  the  last  30  years.  These  returns  to  both  tenant  and  owner  are  unusual. 
It  is  seldom  that  so  large  an  estate  is  handled  so  satisfactorily,  and  a  closer 
study  of  the  system  followed  may  prove  profitable. 

"In  detail,  the  estate  consists  of  15,630  acres,  or  about  24  square  miles  of 
land,  subdivided  into  56  farms  varying  in  size  from  98  to  more  than  1,000 
acres,  an  average  of  about  279  acres  per  farm.  These  farms  are  scattered  over 
a  radius  of  about  12  miles  from  the  central  office.  Considerable  areas  of  waste 
land  are  found  on  some  of  them,  so  that  on  the  average  only  about  72  per  cent 
of  the  land  is  in  actual  cultivation.  The  price  of  cultivated  land  away  from 
the  influence  of  towns  varies  from  S40  to  $65  per  acre,  and  these  farms  will 
probably  show  a  hke  variation  in  value.  The  soil  of  most  of  the  farms  varies 
from  a  sandy  loam  to  a  clay  loam,  is  comparatively  free  from  stones,  and  is 
generally  well  adapted  to  wheat  culture.  The  land  is  sufliciently  level  for  the 
operation  of  labor-saving  machinery. 

"One  of  the  interesting  facts  relative  to  these  farms  and  their  organization 
into  a  profitable  system  of  farming  is  that  they  were  accumulated  one  at  a  time 
and  organized  by  a  merchant  who  had  no  special  knowledge  of  agriculture, 
yet  he  formulated  and  put  into  practice  over  30  years  ago  a  system  which 
has  maintained  yields  and  given  satisfactory  profits  to  both  owner  and  tenants 
up  to  the  present  time.  The  latter  is  regarded  as  the  most  important  fact  in 
this  bulletin. 

"At  the  time  of  the  owner's  death,  13  years  ago,  the  system  of  farming 
which  he  put  in  operation  had  become  so  well  established  that  with  practically 
no  change  since  then  the  yields  of  the  farms  have  been  maintained,  a  consider- 
able indebtedness  has  been  paid,  the  buildings  and  fences  have  been  kept  in  a 
good  state  of  repair,  and  a  net  income  from  the  farms  averaging  a  little  more 
than  5  per  cent  has  been  paid  to  the  estate." 


64  LAND  TENURE 

This  quotation  raises  the  ever-occurring  question  of  capitaHstic 
farming  versus  the  small-scale  farmer.  Evidence  is  given  on  both 
sides  of  this  much  mooted  question  so  that  the  reader  may  draw 
his  own  conclusion.  In  the  past  it  has  been  customary  for  a  tenant 
to  purchase  a  farm,  pay  part  cash  and  give  a  mortgage  for  the 
balance.  A  study  of  statistics  when  such  a  condition  existed 
revealed  the  true  situation.  However,  at  the  present  time  a  care- 
ful study  of  the  census  returns  of  owners  free,  owners  mortgaged, 
and  tenants  shows  that  the  tenants  are  not  increasingly  becoming 
buyers  with  mortgage  encumbrances,  but,  on  the  other  hand,  the 
owners  are  mortgaging  their  farms.  In  brief,  those  who  have 
occupied  a  farm  from  two  to  four  years  should  show  a  large  per 
cent  of  owners  with  mortgages.  Then  in  the  course  of  time 
these  owners  with  mortgages  would  become  owners  free.  Those 
who  have  been  on  the  farm  ten  years  and  over  would  in  such 
an  event  show  a  marked  decrease  in  the  number  of  mortgages. 
However,  statistics  show  that  this  happy  condition  of  affairs  does 
not  exist. 

According  to  a  bulletin  issued  by  the  Iowa  Experiment  Station : 

"To  obtain  greater  economic  independence  requires  more  years  of  saving 
before  ownership  now  than  formerly.  Hence,  the  age  of  ownership  to-day 
is  about  six  years  later  in  hfe  than  it  was  25  years  ago.  Farmers  make  their 
first  payment  on  land  now  at  the  age  of  34,  while  25  years  ago  ownership  was 
obtained  at  28  years  of  age."  ^ 

A  bulletin  of  the  Texas  Station  (No.  21)  asks:  ''What  chance 
has  the  farm  tenant  in  Texas  to  become  a  home  owner?  Some  of 
them  have  the  same  chance  or  opportunity  to  become  home  owners 
that  the  average  merchant  in  the  town  has  to  become  a  merchant 
prince.    The  chances  are  sHght." 

A  study  of  the  tenant  systems  of  farming  in  the  cotton  belt 
along  the  Mississippi  River  between  Memphis  and  Vicksburg, 
made  in  1913,  and  covering  many  hundred  records,  found  the 
following  situation: 

Share  Croppers,  Share  Renters,  Cash  Renters. — The  study 
makes  a  comparison  among  share  croppers,  who  supply  nothing 
but  their  labor  and  receive  one-half  the  crop;  share  renters  who 
supply  their  own  implements  and  livestock  and  receive  two-thirds 
or  three-fourths  of  the  crop;  and  cash  renters,  who  supply  the  same 
items  as  share  renters  but  pay  a  fixed  rent  in  cash  or  lint  cotton. 
In  this  area  the  tenants  form  92.0  per  cent  of  all  farmers.  The 
average  labor  income  of  share  croppers  was  $333 ;  for  share  renters 

« Lloyd,  O.  G.,  Farm  Leases  in  Iowa.    Iowa  Exp.  Sta.  Bui.  159. 


SHARE  CROPPERS,  SHARE  AND  CASH  RENTERS  65 

$398;  and  for  cash  renters  $478.  The  average  rate  of  interest 
received  by  the  landlord  from  share  croppers  was  13.6  per  cent; 
from  share  renters  11.8  per  cent ;  and  from  cash  renters  6.6 
per  cent. 

A  survey  in  Johnson  County,  Missouri,  speaks  of  farm  tenancy 
there  in  these  terms : 

"A  rural  community  where  80  per  cent  of  the  population  is  changing  every 
five  years  cannot  have  desirable  social  conditions." 

"A  study  of  the  foregoing  results  (advantages  and  disadvantages  of 
tenancy)  leads  to  the  conclusion  that  the  present  system  of  land  tenure  is 
undesirable,  first  because  it  encourages  tenants  to  become  shiftless,  second, 
because  it  depletes  the  soil,  third,  because  it  is  very  detrimental  to  the  improv- 
ing of  rural  social  conditions." 

The  Wisconsin  State  Board  of  Public  Affairs,  in  1912,  sought 
a  remedy  for  increasing  tenancy.  They  first  canvassed  the  actual 
situation  in  Wisconsin,  and  found  that  in  the  new  lands  of  the 
north  there  is  little  tenancy,  but  in  the  older  higher  priced  lands, 
tenancy  is  large  and  growing  larger.  To  quote,  and  condense 
freely,  from  the  Board's  report : 

"This  suggests  that  in  Wisconsin  as  in  other  parts  of  the  Middle  West 
the  proportion  of  farm  tenancy  increases  as  the  cost  of  a  farm  becomes 
greater  .  .  .  There  is  no  convincing  evidence  of  an  increase  in  farm  owner- 
ship. On  the  contrary,  the  evidence  seems  to  indicate  that  there  will  be  a 
continuous  increase  in  tenancy  generally  throughout  Wisconsin,  unless  steps 
are  taken  to  prevent  it.  It  is  the  duty  of  the  state  to  encourage  the  proper 
settlement  of  its  undeveloped  farm  lands.  It  is  just  as  much  the  duty  of  the 
state — and  this  is  a  duty  of  self-protection — to  encourage  farm  ownership  by 
taking  measures  to  check  the  growth  of  farm  tenancy.  These  measures  should 
be  taken  in  time  while  the  proportion  of  tenant  farmers  in  the  state  is  still 
relatively  low  and  the  problem  of  dealing  with  them,  therefore,  more  simple 
than  it  will  be  if  left  unattacked  until  a  solution  is  absolutely  forced  on  the 
people  of  the  state. 

"Wisconsin  should  be  taking  warning  from  the  experience  of  other  states 
in  the  Middle  West.  The  1910  census  shows  that  already  in  Illinois  more 
than  41  in  every  100  farms  are  operated  by  tenant  farmers  and  that  in  some 
counties  in  that  state  more  than  60  in  every  100  farms  are  so  operated  .  .  . 

"The  best  that  can  be  said  for  any  system  of  farm  tenancy  involving  any 
large  proportion  of  the  agricultural  population,  is  that  it  is  better  than  some- 
thing worse.  It  may  be  argued,  for  example,  that  it  is  better  for  the  negro 
in  the  southern  states  to  be  a  tenant  farmer  than  to  be  a  slave  or  a  casual 
laborer.  In  comparison  with  farm  ownership,  there  can  be  no  argument  for 
farm  tenancy  as  a  system  of  land  tenure.  Statesmen  and  pohtical  thinkers 
the  world  over  have  for  centuries  recognized  the  truth  in  this  statement  and 
have  urged  and  enacted  into  law  plans  for  governmental  activity  to  check 
landlordism  and  promote  farm  ownership  by  the  actual  farmers.  To-day 
some  of  the  most  important  questions  engaging  the  attention  of  the  parUa- 
ments  of  Europe,  Australia  and  New  Zealand  are  questions  of  land  policy. 
The  people  of  Great  Britain  are  at  the  present  time  engaged  in  a  tremendous 
struggle  to  free  the  land  in  England  from  the  grasp  of  the  landlord  so  that  the 
man  who  will  farm  it  can  have  it  to  farm  advantageously.  In  Ireland  the 
5 


66  LAND  TENURE 

land  is  already  being  turned  back  to  the  ownership  of  the  men  who  cultivate 
the  soil — but  at  the  expense  of  a  state  subsidy  costing  the  treasury  of  the 
United  Kingdom  miUions  of  pounds.  New  Zealand  and  Australia  have  been 
legislating  for  many  years  to  break  up  large  land  holdings  and  prevent  the 
growth  of  landlordism. 

"The  State  of  Wisconsin  cannot  afford  to  permit  the  growth  of  a  landed 
aristocracy  or  the  creating  of  a  permanent  class  of  tenant-farmers.  World- 
wide experience  warns  against  the  social  and  economic  dangers  in  allowing 
such  conditions.  The  question  is  what  preventative  measure  shall  the  state 
adopt?  ...  It  is  a  serious  question,  as  urged  by  Dr.  Richard  T.  Ely,  whether 
or  not  a  state  could  maintain  a  system  of  state  landlordism  in  the  face  of  the 
united  opposition  of  the  majority  of  its  tenants. 

"There  are  four  ways  of  attacking  the  farm  tenant  problem,"  said  the 
Board:  "(1)  Assume  farm  tenancy  to  be  inevitable.  Make  provisions  to  im- 
prove the  conditions  of  tenancy,  such  as  long-time  leases,  legal  regulation  of 
rights  and  duties  of  landlord  and  tenant.  (2)  Assume  farm  tenancy  to  be 
inevitable.  Make  the  state  itself  the  landlord.  (3)  Assume  tenancy  to  be 
undesirable  and  unnecessary.  The  State  may  adopt  a  taxing  system  to  break 
up  landlordism  and  land  speculation.  (4)  Assume  tenancy  to  be  undesirable 
and  unnecessary.  The  State  may  use  state-aided  land  purchase,  on  long  time 
farm  mortgage  loans  at  low  rates  of  interest,  thus  enabling  tenants  to  become 
land  owners.  The  fourth  method  is  recommended  by  the  Wisconsin  Board  as 
the  "only  adequate  method  of  attacking  the  problem  which  is  capable  of 
immediate  adaption  to  conditions  in  Wisconsin." 

Corporation  Farming. — Corporation  farming  has  long  been 
known  in  all  parts  of  the  United  States.  No  records  are  available 
showing  what  per  cent  of  such  corporations  fail  and  what  per  cent 
succeed.  An  increasing  number  of  railroad  and  industrial  corpora- 
tions are  now  operating  large  farms  largely  for  experimental  pur- 
poses. The  International  Harvester  Company  is  conspicuous  for 
its  work  in  this  line.  The  Portland  Cement  Company  owns  large 
tracts  of  land  all  over  the  United  States,  not  originally  purchased 
for  agricultural  purposes,  but  now  being  used  for  crop  production. 
A  general  manager  supervises  these  farms,  using  up-to-date  busi- 
ness methods  in  developing  farm  properties,  including  cost  account 
keeping.  A  New  York  financial  editor  in  speaking  of  this  situation 
expresses  himself  thus  hopefully: 

"If  one  company  can  operate  farms  all  over  the  country  under  a  central 
office,  using  the  most  modern  business  methods  of  development  and  marketing, 
the  example  is  Ukely  to  be  followed.  Just  why  a  big  company  could  not  buy 
extensive  land  and  work  it  in  the  same  way  is  hard  to  understand.  It  might 
be  a  relief  to  many  struggling  farmers  whose  incomes  often  become  less  and 
less  each  year,  to  join  the  payroll  of  a  Farm  Corporation  and  be  sure  of  a 
salary  every  two  weeks  .  .  .  The  economic  advantages  are  obvious,  but  the 
social  advantages  would  be  equally  great.  An  intelligently  conducted  farming 
corporation  would  out  of  self  interest  finda  way  to  make  rural  hfemore  attractive 
for  its  employees,  and  by  both  example  and  practice  would  be  able  to  reverse 
the  city-ward  tendency  of  our  population,  which  is  one  of  the  great  evils  of 
the  present  day  in  America.  The  picture  of  a  great  farm  scientifically  and 
sympathetically  conducted  by  a  wise  and  progressive  corporation  is  in  fact 


SIZE  OF  FARMS 


67 


so  attractive  to  both  the  financier  and  the  sociologist  that  we  shall  be  surprised 
if  it  does  not  soon  take  shape  in  the  prospectus  of  such  an  enterprise  and  the 
issuance  of  its  securities  under  responsible  auspices."  "^ 

This  roseate  picture  of  a  good  and  wise  corporation,  with  the 
farmer  on  its  payroll,  will  not  be  likely  to  meet  with  the  hearty 
approval  of  the  farmers  themselves.  But  if  '' efficiency"  is  on 
that  side,  the  corporation  may  in  the  end  prevail. 

Size  of  Farms. — What  change  is  taking  place  in  the  size  of 
farms?  Omitting  the  bonanza  farms  of  the  northwest,  the  plan- 
tations of  the  south  and  the  great  ranches  of  the  west,  we  find  that 
the  size  of  the  farm  has  apparently  begun  to  grow  bigger.  This  is 
a  further  indication  of  our  trend  toward  capitafistic  agriculture. 
For  the  complete  statistics  on  this  point  the  student  is  referred 
to  the  table  in  the  appendix  to  this  chapter.  The  size  of  farms  in 
the  strictly  agricultural  states  is  given  in  the  brief  table  below: 

Size  of  Farms  in  Six  Typical  Farming  States. — Acres 


Ohio 

Indiana 

Illinois 

Iowa 

Missouri 

Kansas 

1910 

88.6 

98.8 

129.1 

156.3 

124.8 

244.0 

1900 

88.5 

97.4 

124.2 

151.2 

119.3 

240.7 

1890 

92.9 

102.8 

126.7 

151.0 

129.3 

181.3 

1880 

99.2 

105.3 

123.8 

133.5 

129.3 

154.6 

1870 

110.8 

112.3 

127.6 

133.6 

146.3 

148.0 

1860 

113.8 

124.3 

145.9 

164.6 

215.4 

171.0 

1850 

125.0 

136.2 

158.0 

184.8 

178.7 

Average  of  Six  States  Above  for  Seven  Decades: 


1850 — 156  5  acres 

1860—155.8 

1870—129.8 


1880—124.3  acres 
1890—130.7 
1900—136.9 
1910—140.3 


We  may  illustrate  the  tendency  of  the  large  farmers  to  absorb 
the  small  farmer  by  the  following  concrete  illustration:  Shortly 
after  the  close  of  the  Civil  War  an  ex-soldier  by  the  name  of  John 
McNiel  moved  from  Ohio  to  the  eastern  part  of  Kansas  and  settled 
on  a  farm.  He  located  in  a  community  settled  almost  entirely  by 
people  from  his  section  of  Ohio.  Here  John  McNiel  with  his  wife 
built  a  home  on  a  160  acre  farm.  He  was  a  man  of  unusual  indus- 
try and  of  sterling  honesty.  They  reared  a  family  of  two  children, 
one  boy  and  one  girl.  They  faced  the  privations  of  pioneer  life 
with  courage.  They  lived  through  many  months  of  discourage- 
ments, but  managed  to  save  a  little  from  year  to  year.    By  the 

7  Theodore  Price  in  Commerce  and  Finance,  Aug.  23,  1916,  Dec.  13,  1916. 
For  a  statement  of  the  case  for  corporation  farming,  by  Pres.  G.  A.  Vincent, 
of  the  University  of  Minnesota,  and  a  spirited  reply  thereto,  see  the  Dakota 
Farmer,  Sept.  15,  1916,  p.  972. 


68  LAND  TENURE 

happy  combination  of  hard  work  and  good  management  this  man 
made  a  success  of  farming.  He  built  a  home  far  above  the  average 
farm  home  both  in  beauty  and  convenience.  His  yard  was  decor- 
ated with  beautiful  shade  trees  and  pine  trees.  His  out-buildings 
were  painted.  Now  the  neighbors  of  John  McNiel  likewise  built 
themselves  homes  and  also  planted  trees  on  the  prairie.  After 
the  lapse  of  twenty-five  or  thirty  years  these  trees  became  groves 
of  immense  shade  trees.  But  these  neighbors  were  not  prosperous. 
First  John  McNiel  buys  out  the  neighbor  on  one  side.  This  house 
is  demolished;  every  tree  is  cut  down;  the  place  where  once  a 
human  habitation  stood  was  reduced  to  cultivation  and  became 
the  site  of  green  cornfields.  And  then  the  neighbor  on  the  other 
side  was  bought  out.  The  well  was  filled  up;  the  trees  were  cut 
down;  the  houses  removed;  this  home  was  obliterated  from  the 
face  of  the  earth.  Likewise  with  a  third  farm.  Now,  this  process 
may  be  viewed  as  a  process  of  growth  or  as  a  process  of  decay. 
From  the  standpoint  of  John  McNiel,  farming  is  a  success  and  the 
large  holding  is  better  than  the  small  holding;  from  the  standpoint 
of  the  three  neighbors,  however,  farming  is  a  failure.  The  writer 
on  a  recent  visit  to  this  section  was  impressed  with  the  process  of 
decay  which  is  overtaking  these  homesteads,  especially  those 
houses  built  from  thirty  to  fifty  years  ago.  He  carries  in  mind 
the  vivid  impression  of  one  house  in  particular  where  the  outbuild- 
ings had  fallen  into  decay  and  the  house  itself  was  converted  into 
a  sheep  fold.  About  the  house  and  even  passing  in  and  out  of  the 
doors  were  hundreds  of  sheep,  suggesting  the  days  of  Queen  Eliza- 
beth, when  enclosures  had  converted  tillable  lands  into  sheep 
pastures  to  such  an  extent  that  laws  were  enacted  against  the 
^' decay  of  villages.'*  In  this  same  neighborhood  is  another  farm 
which  was  given,  "ready  made,"  new  house,  buildings,  equipment, 
and  all,  to  a  young  farmer  and  his  wife  by  the  mother  of  the  farmer. 
This  place  has  changed  hands,  the  present  owner  having  greatly 
improved  it  and  enlarged  it  by  adding  two  small  farms  to  it. 
The  farmer  to  whom  it  was  given  could  not  make  a  living  on  it, 
and  is  now  working  as  a  day  laborer.  This  case  simply  illustrates 
the  human  side  of  the  problem  of  land  tenure  and  of  any  scheme 
of  legislation  intended  to  benefit  small  landholders.  Some  men 
are  tenants  and  ought  to  remain  tenants,  because  they  are  not 
qualified  to  be  owners.  Some  are  day  laborers  because  of  their 
personal  qualifications.  There  can  never  be  a  perfect  system 
of  land  tenure  until  there  is  a  perfect  race  of  men  to  occupy 
the  land. 


FREE  TRADE  IN  LAND  69 

Mortgages. — The  number  of  mortgages,  like  the  amount  of 
tenancy,  is  increasing  in  the  United  States.  Do  mortgagors  become 
owners?  This  point  has  already  been  mentioned.  Our  conclusion 
is  that  a  smaller  and  smaller  per  cent  of  mortgagors  become  owners. 
On  the  other  hand,  a  great  many  present  owners  will  in  time 
become  mortgagors.  Mortgages  again  like  tenancy  differ  with 
different  sections  of  the  United  States.  The  chief  class  of  tenancy 
was  given  as  the  short-term  tenure.  The  chief  mortgage  system 
to-day  (before  the  Federal  Farm  Loan  system  has  had  time  to 
change  it)  is  the  short-term  mortgage,  namely,  five  years.  Custom 
has  apparently  established  the  term  of  mortgage  as  about  five 
years.  The  rate  of  interest  of  course  varies  with  different  sections 
of  the  country.  When  we  consider  manufacture,  transportation, 
or  any  of  the  other  capitalistic  forms  of  industry,  we  at  once 
think  of  their  bonds  as  having  a  fairly  long  time  to  run.  The 
ordinary  corporation  bond,  whether  it  be  municipal,  public  utility, 
industrial,  mining,  or  other  form,  commonly  runs  twenty  to  forty 
years.  Agricultural  bonds,  in  other  words,  mortgages  on  farms, 
have  the  same  reasons  exactly  for  running  long  periods  as  the  vari- 
ous classes  of  bonds  mentioned  above.  A  five-year  mortgage  means 
that  the  mortgagor  very  commonly  must  renew  his  mortgage 
at  the  end  of  the  five  years  or  submit  to  foreclosure  proceedings. 
We  have  developed  an  institution  in  the  United  States  sometimes 
known  as  the  "padded"  mortgage  and  sometimes  known  as 
the  "fake"  mortgage.  For  instance,  a  farmer  desiring  to  partici- 
pate in  land  speculation  arranges  to  buy  a  farm  for  $8,000.  He 
pays  cash  $4,000.  He  then  gives  a  mortgage  for  $12,000  making 
the  apparent  cost  $16,000  instead  of  $8,000.  The  seller  of  the 
farm  gives  his  promissory  note  for  $8,000  as  an  offset  to  the  ficti- 
tious part  of  the  mortgage.  When  the  newcomer  appears  on  the 
scene  to  buy  the  farm  he  is  of  course  impressed  with  the  fact 
that  the  farm  is  mortgaged  for  $12,000,  which  is  represented 
to  him  to  be  three-fourths  of  its  actual  value.  He  becomes  the 
buyer  then  at  $16,000.  This  form  of  real  estate  speculation  is  in 
vogue  in  certain  sections  of  our  country.  The  mortgage  situation 
under  the  Federal  Farm  Loan  Act  is  discussed  in  a  later  chapter 
dealing  with  Credit. 

Free  Trade  in  Land. — The  English  theory  that  no  one  can 
secure  absolute  title  in  fee  simple  to  the  land  has  never  obtained 
in  the  United  States.  Neither  has  this  country  hedged  the  buying 
and  selling  of  land  with  restrictions  or  obstacles  as  in  some  of  the 
older  countries,  the  government  claiming  original  title  to  the  land, 


70  LAND  TENURE 

and  giving  the  individual  absolute  ownership  of  the  soil.  The 
owner  of  the  soil  may  transfer  the  ownership  at  will  and  with 
very  little  formality  and  with  very  little  expense.  This  has  pro- 
duced in  the  United  States  an  unorganized  market  for  real  estate. 
In  every  city,  in  every  village,  in  every  hamlet,  we  have  now 
dealers  in  real  estate.  Some  are  stable  dealers  occupying  perma- 
nent quarters,  guaranteeing  the  titles  to  the  lands  they  handle  and 
rendering  other  services  incidental  to  real  property.  Some  dealers 
are  merely  scalpers  in  the  market  looking  for  a  few  chance  bargains 
here  and  there,  having  no  standard  prices  or  commissions  and 
rendering  no  services  of  any  kind  to  the  community.  It  is  this 
class  of  dealers  that  charges  a  commission  on  land  sales  ranging 
from  $1.00  to  $50  an  acre.  It  may  be  truthfully  asserted  that 
nowhere  is  speculation  more  rife  or  more  injurious  than  in  the 
unorganized  market.  Oddly  enough  the  farmers  manifest  a  tre- 
mendous and  ardent  interest  in  the  activities  of  Wall  Street,  the 
produce  exchanges,  and  the  grain  exchanges  of  the  country,  which 
have  very  little  effect  upon  the  farmer  and  at  the  same  time  they 
remain  largely  unconcerned  about  the  unorganized  speculative 
land  market  which  lies  at  their  door.  In  this  unorganized  market, 
as  intimated  above,  we  have  the  rehable  dealers,  the  scalpers,  and 
the  out-and-out  frauds.  For  instance,  the  Federal  government 
has  but  recently  succeeded  in  convicting  a  group  of  prominent 
men  of  frauds  in  connection  with  the  sale  of  Florida  lands.  Misuse 
of  the  mail  brought  the  case  into  the  Federal  Court.  This  case  is 
typical  of  hundreds  of  others  which  are  known  to  every  reader  of 
our  daily  and  weekly  press. 

Free  trade  in  land  has  been  undoubtedly  the  best  thing  for 
the  country  in  spite  of  the  many  abuses  which  have  crept  in.  The 
question  now  is  how  to  remedy  some  of  the  obvious  defects  in  our 
methods  of  land  trading.  Some  hopeful  signs  are  now  in  evidence. 
Two  things  are  now  being  done.  In  some  localities  farmers* 
organizations  are  now  listing  all  farm  lands  which  are  for  sale. 
The  list  is  prepared  by  the  farmers  and  contains  a  correct  and 
honest  description  of  the  land  and,  what  is  more  important,  a 
fair  price.  This  list  is  brought  to  the  attention  of  would-be  settlers, 
thereby  precluding  the  chance  for  the  middleman  to  take  an  unduly 
large  commission.  Another  step  which  has  been  taken  may  be 
called  state  oversight  of  land  sales.  For  example,  in  connection 
with  the  state  departments  of  agriculture  in  the  states  of  Connec- 
ticut, Pennsylvania,  New  Jersey,  New  York,  Alabama,  and  others, 
a  booklet  is  issued  from  year  to  year  giving  a  descriptive  and  accu- 


LAND  CERTIFICATION  71 

rate  list  of  farm  lands  for  sale  in  these  respective  states.  This 
tendency  to  take  charge  of  the  marketing  of  land  in  such  a  way 
as  to  eliminate  the  huge  wastes  of  the  middleman,  the  overcapital- 
ization of  land,  the  robbery  and  ruin  of  the  immigrant,  is  one  of 
the  most  hopeful  tendencies  now  discernible  in  connection  with 
this  subject.  Indeed,  some  attention  is  now  being  given  to  the 
advisability  of  land  certification. 

The  Torrens  System. — The  weak  point  in  our  land  title  system 
at  present  is  the  cumbersome  method  of  recording  land  titles. 
The  title  is  registered  with  some  governmental  functionary  com- 
monly known  as  the  County  Register  of  Deeds.  The  purchaser, 
to  be  sure  of  the  soundness  of  his  title,  usually  is  put  to  the  expense 
of  securing  what  is  familiarly  known  as  an  abstract  of  title.  The 
records  are  searched  from  the  original  grant  of  the  land  down  to 
the  present  moment  of  sale  to  see  if  there  are  any  outstanding 
claims  which  would  cast  a  shadow  on  the  title.  Where  titles  have 
changed  hands  many  times  as  is  the  case  in  the  older  sections  the 
expenses  of  this  investigation  are  considerable.  Even  then  a  flaw 
may  be  discovered  later  in  the  title.  A  new  system  is  coming  into 
use  in  the  United  States  known  as  the  Torrens  System.  It  is  now 
in  use  in  about  half  of  our  states.  This  system  originated  in  South 
Australia  in  1858  and  has  spread  widely  throughout  the  British 
Colonies.  The  most  important  features  of  this  system  are  simple 
enough,  namely:  Land  owners  record  their  titles  to  real  property 
with  a  Registrar.  This  official,  after  due  examination,  grants  a 
Certificate  of  Ownership  which  is  an  absolute  and  indisputable 
title  against  all  the  world.  From  that  moment  on  transfers  of 
real  property  can  be  made  by  the  transfer  of  the  certificate  and 
proper  registration  of  this  fact.  The  title  is  given  to  owners  in 
actual  possession.  If,  however,  another  person  should  later  estab- 
lish his  legal  right  to  the  property  he  can  claim  indemnity  only 
for  his  loss  but  cannot  recover  the  property  itself.  Funds  for  such 
emergency  payments  are  usually  furnished  by  the  state  and  come 
largely  from  the  registration  fees.  The  adoption  of  this  system 
in  this  country  would  offset  all  necessity  for  securing  the  so-called 
abstract  of  title,  and  would  eliminate  the  very  expensive  work  now 
performed  by  the  title  guarantee  companies. 

Land  Certification. — Progressive  traders  in  the  real  estate 
market  are  proposing  that  the  purchaser  of  farm  land  be  protected 
by  receiving  a  certificate  with  his  land  title,  correctly  setting  forth 
the  topography  and  the  soil  conditions  (based  on  the  federal  soil 
survey),  climatic  conditions,  based  on  official  statistics  as  to  tem- 


72  LAND  TENURE 

perature,  rainfall,  etc.,  and  possibly  economic  statistics  as  to 
assessed  valuation,  crop  yields  for  a  period  of  years,  etc.  Since 
this  is  the  age  of  ''blue  sky  laws,"  ''pure  food  laws,"  and  certified 
products  of  various  kinds,  it  is  logical  to  expect  a  development 
of  some  form  of  land  certification. 

As  Vermont  Sees  the  Problem  of  Land  Trading. — ^The 
Agricultural  Commissioner  of  Vermont,  in  a  recent  report,^ 
discussed  the  problem  of  the  sale  of  farms  in  that  State.  Both  his 
experience  and  his  conclusions  are  typical,  and  are  worth  quoting 
in  full: 

"Land  values  in  Vermont  are  so  low  in  comparison  with  those  in  other 
parts  of  the  country  that  proper. advertising  of  our  opportunities  as  carried 
on  by  the  pubhcity  bureau  of  the  Secretary  of  State's  Office,  coupled  with 
assistance  in  the  way  of  giving  specific  information  to  prospective  farm  buyers 
residing  at  a  distance  would  undoubtedly  enable  Vermont  to  attract  a  large 
number  of  people  who  would  become  good  farmers  and  good  citizens.  It  has 
seemed  to  the  commissioner  of  agriculture  that  as  a  preUminary  to  a  satis- 
factory program  of  this  kind  an  example  should  be  made  of  real  estate  agents 
who  are  carrying  on  a  campaign  of  farm  sales  which  result  all  too  often  in 
injustice  to  the  purchaser. 

*'We  have  in  many  sections  of  the  State  farms  containing  much  rough 
land  which  may  be  bought  at  low  prices.  This  affords  opportunity  for  a 
certain  type  of  real  estate  agent  to  purchase  or  secure  options  upon  these 
properties  at  small  cost  and  then,  by  advertising  them  for  what  they  are  not, 
sell  them  to  unsuspecting  persons  at  prices  which  will  net  the  agent  a  large 
profit.  While  the  purchasers  of  these  properties  might  succeed  if  the  farms 
were  secured  at  their  real  value,  they  are  unable  to  make  a  hving  and  pay  inter- 
est upon  the  excessive  capitaHzation.  Therefore,  after  a  period  of  discourage- 
ment they  abandon  the  property  in  disgust.  The  State  thereby  losing  the 
possibihty  of  securing  a  desirable  citizen. 

"One  such  case  was  brought  to  our  attention  in  the  spring  of  1913  by  the 
late  Bishop  William  F,  Weeks.  An  investigation  showed  that  the  real  estate 
firm  of  M.  Susskind  &  Co.  secured  by  option  or  otherwise  the  contract  of 
certain  farms  in  Sandgate  which  were  subsequently  sold  to  some  German 
families.  One  of  the  farms,  known  as  the  Hamilton  farm,  was  sold  to  one  Paul 
Gobel,  who,  after  occupying  it  for  a  short  time,  was  obliged  to  abandon  it 
after  foreclosure  of  a  mortgage  on  the  personal  property.  The  records  of  this 
case  seem  to  indicate  that  Gobel  had  been  induced  to  buy  this  farm  through 
misrepresentation  and  fraud.  A  report  was  made  to  Gov.  Allen  M.  Fletcher, 
with  a  request  that  the  matter  be  investigated  by  the  legal  department  of 
the  State.  An  investigation  by  Attorney  General  Brown  led  to  the  indictment 
of  M.  Susskind  and  Otto  Trieb,  members  of  the  firm  of  M.  Susskind  &  Co., 
at  Manchester,  June  1914.  For  various  reasons  the  case  was  not  brought  to  a 
final  issue  until  Aug.  15,  1916.  On  this  date  the  respondents  entered  a  plea 
of  nolo  contendere,  paid  a  fine  of  $200  each  and  paid  Paul  Gobel  a  sum  of 
money  which  partially  reimbursed  him  for  his  loss.  It  is  hoped  that  this 
example  will  put  an  end  to  real  estate  operations  of  this  nature  in  the  State 
of  Vermont,  because  such  sales  profit  only  the  real  estate  operator  and  are  a 
detriment  to  all  others." 

^Eighth  Annual  Report  of  the  Commissioner  of  Agriculture,  State  of 
Vermont,  1916,  E.  S.  Brigham,  Commissioner,  pp.  13-14. 


QUESTIONS  ON  THE  TEXT  73 

The  buying  and  selling  of  land  is  more  important  than  the  buy- 
ing and  selling  of  the  products  of  the  land.  It  is  high  time  that 
earnest  citizens  gave  it  serious  thought. 

Real  Estate  Exchanges. — In  the  grain  trade,  as  in  the  stock 
and  bond  market,  the  responsible  traders  have  found  it  wise,  as  a 
protection  to  themselves  and  a  protection  to  the  public,  to  organize 
and  adopt  strict  trading  rules.  These  associations  or  '^Exchanges" 
operate  under  rules  and  commission  charges  open  and  pubUc  and 
known  to  all  parties  interested.  In  the  real  estate  market  there 
is  now  apparent  a  beginning,  here  and  there,  of  a  Real  Estate 
Exchange,  operating  under  definite  and  ethical  rules,  as  a  pro- 
tection to  the  honest  real  estate  dealer  and  to  the  public.  The 
honest  dealers  realize  the  scriptural  truth  that  their  enemies 
are  they  of  their  own  household,  and  so,  by  organizing  exchanges 
with  severe  membership  requirements,  are  taking  steps  to  weed 
out  the  unscrupulous  traders. 

QUESTIONS  ON  THE  TEXT 

1.  Illustrate  the  different  interpretations  of  the  increase  of  farm  tenancy, 

citing  for  this  purpose  the  speakers  before  the  meeting  of  the  New  York 
State  Agricultural  Society. 

2.  Compare  the  views  of  Stelzle  and  Simons  on  the  changes  in  the  size  of 

farms. 

3.  What  does  Simons  mean  by  "capitalism"  in  agriculture? 

4.  What  has  been  our  theory  of  a  sound  agriculture  so  far  as  land-ownership 

is  concerned? 

5.  Compare  Canada  and  the  United  States  as  to  changes  in  farm  tenancy. 

6.  Is  tenancy  likely  to  increase  or  decrease  with  us?    Quote  Spilhnan  in  1912, 

7.  On  the  social  and  economic  significance  of  farm  tenancy,  cite  the  findings 

of  the  Ohio  "Survey";  of  the  United  States  Industrial  Relations  Com- 
mission; the  Cape  Girardeau,  Missouri,  affair. 

8.  Name,  define,  and  illustrate  the  different  forms  of  rent  contracts. 

9.  Show  the  economic  and  social  significance  of  short  time  tenures  (particularly 

in  Maryland,  Tennessee,  Iowa,  Texas,  Mississippi,  Missouri,  Wisconsin). 

10.  Illustrate  successful  farm  tenancy  in  eastern  Maryland,  as  described  by 

the  Federal  government. 

11.  What  changes  are  taking  place  in  the  size  of  farms?    Cite  the  case  of 

John  McNeil,  and  state  its  significance. 

12.  Give  examples  of  corporation  farming.    What  is  its  success?    State  the 

views  of  Theodore  Price  on  corporation  farming. 

13.  \Miat  changes  are  talcing  place  as  to  the  number  of  mortgages  on  farms? 

14.  Contrast  the  agricultural  mortgages  with  the  mortgages  in  other  industries 

as  to  the  usual  term  of  years  each  runs;  as  to  rate  of  interest. 

15.  Explain  the  padded  mortgage. 

16.  ^^^lat  is  meant  by  free  trade  in  land?    In  this  respect  compare  the  United 

States  and  England. 

17.  Show  how  the  real  estate  market  is  usually  conducted  in  the  United  States. 

18.  Explain  and  justify  the  Torrens  System. 

19.  Show  how  some  defects  in  our  land  trading  may  be  remedied. 

20.  Cite  the  Vermont  case  of  merchandising. 


74  LAND  TENURE 

21.  State  the  need  of  organized  exchanges  to  deal  in  real  estate. 

22.  Give  the  views  of  Henry  Wallace  on  tenancy. 

23.  Give  the  main  points  in  the  "Declaration  on  Farm  Tenancy"  issued  by 

the  Agricultural  Commission  of  the  American  Bankers  Association. 

24.  Cite  statistics  from  9  states  illustrating  the  rule  that  cheap  land  means 

few  tenants,  dear  land  many  tenants. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  State  your  approval  or  disapproval  of  Simons's  theory  of  capitalism  in 

agriculture,  and  give  reasons  for  your  position. 

2.  Formulate  a  land  policy  for  the  United  States  which  will  recognize  and 

preserve  the  good  features  of  tenancy  and  eliminate  the  bad  features. 

3.  Formulate  a  workable  Land  Certification  program. 

4.  State  the  case  for  organized  Real  Estate  Exchanges  built  up  on  principles 

akin  to  those  of  the  Grain  Exchanges.    Give  the  working  of  some  such 
Real  Estate  Exchange. 

5.  Complete  the  tables  in  Appendices  by  adding  statistics  from  the  1920 

census. 

6.  Prepare  tables  of  statistics  from  the  Census  Reports,  showing  per  cent  of 

farms  mortgaged  by  decades,  1890-1920  (a)  by  Grand  Divisions,  and 
(6)  for  each  State  separately. 

REFERENCES 

1.  Benton,  A.  H.:  "Farm  Tenancy  and  Leases."  Bulletin  178,  Univer- 
sity of  Minnesota  Agricultural  Experiment  Station,  St.  Paul,  Dec,  1918. 
Statistics  are  given  showing  that  "Farm  tenancy  has  been  rapidly  increasing 
in  Minnesota,  particularly  in  the  southwestern  part  of  the  State  where  the 
average  land  values  are  highest." 

2.  Ely,  Richard  T.:  "Private  Colonization  of  Land."  American  Eco- 
nomic Review,  Sept.  1918,  pp.  522-548. 

3.  Ely,  Richard  T.,  and  Galpin,  Charles  J.:  "Tenancy  in  an  Ideal 
System  of  Land  Ownership."  American  Economic  Review,  Vol.  9,  pp.  180-212 
(March  1919).  Also  reprinted  in  bulletin  form  by  the  American  Association 
for  Agricultural  Legislation,  Madison,  Wisconsin,  1919. 

4.  Galpin,  C.  J.,  and  Hoag,  Emily  F.:  "Farm  Tenancy:  an  Analysis  of 
the  Occupancy  of  500  Farms."  Research  Bulletin  44,  Agricultural  Experi- 
ment Station,  University  of  Wisconsin,  Feb.,  1919. 

5.  Haggard,  H.  Rider:   "The  Poor  and  the  Land."    London,  1905. 

6.  Pratt,  E.  A.:  "Small  Holders.  What  They  Must  Do  to  Succeed." 
London,  1909. 

7.  Wendt,  Dr.  C.  L.:  "A  Partnership,  Not  a  Tenancy."  The  Dakota 
Farmer,  July  1,  1918. 

8.  Report  of  the  Land  Settlement  Board  of  the  State  of  Cahfomia.  Sacra- 
mento, June  30,  1918,  and  later  annual  reports.  Farm  allotments  and  farm 
laborers'  allotments  in  the  Durham  State  Land  Settlement.  State  Land 
Settlement  Board,  Sacramento,  May,  1918. 

9.  International  Institute  of  Agriculture,  Rome.  "Monthly  Bulletin  of 
Economic  and  Social  Intelhgence"  (changed  to  "International  Review  of 
Agricultural  Economics"  January,  1916). 

Finland. — "Results  of  Interior  Colonization."  Nov.,  1916,  106-114;  Jan., 
1917,  90-114. 

Russia. — "Results  of  the  New  Agrarian  Reform,"  Dec,  1916;  Feb.,  1917, 
89-107.  "Activity  of  the  Peasants'  Land  Bank,"  Oct.,  1917,  34-51.  "Aboli- 
tion of  Landed  Property,"  May,  1918,  437-438. 


REFERENCES  75 

Bosnia,  Herzegovina. — "Agrarian  Question,"  Oct.,  1916,  69-83.  Ferfalk, 
Dr.  F.:  "A  New  Way  to  Solve  the  Agrarian  Question  in  Bosnia."  June, 
1917,  80-86. 

Portugal. — "Consolidation  of  Scattered  Slips,"  Aug.,  Sept.,  Oct.,  1919, 
568-570. 

Italy. — "Colonization  in  Somaliland,"  March,  1917,  94-116.  "Italian 
Colony  of  Erythrea,"  Feb.,  1917,  67-89.  "Collective  Farms"  of  Italy,  May, 
1918  366—383. 

South  Africa.— ''Land  Settlement  in,"  Aug.,  1918,  682-697. 

Australia. — Peterson,  J.  W.:  "Land  Settlement  and  the  Provision  of 
Credit  in  Western  Australia,"  Dec,  1916.  93-104.  "Land  Settlement,  South 
Australia,"  May,  1918,  434-435.  "Land  Settlement  in  New  South  Wales," 
Aug.,  Sept.,  Oct.,  1919,  525-535.  "Closer  Settlement  in  New  Zealand,"  June, 
1916,  109-113.  "New  Zealand,  Land  Tenure,"  etc.,  Sept.,  1918,  743-764. 
Jenkins,  J.  E.:  "Land  Settlement  in  Victoria,"  July,  1916,  87-95.  "Land 
Settlement,  Queensland,"  April,  1916,  77-87.  "New  Zealand,  Torrens  Title," 
April,  1916,  92-113.  "Land  Settlement,  Victoria,"  January,  1916,  85-97. 
" Land  Settlement,"  April,  1917, 100-101 .  "  Agricultural  Conditions  and  Land 
Tenure,  Victoria,"  Nov.,  Dec,  1918,  911-921. 

New  Zealand.— "Credit  for  Land  Settlement,"  Oct.,  1918,  817-823. 

Argentina.— "Land  Problems,"  Aug.,  1918,  645-663.  "Rural  Property 
and  the  "Problems  of  Colonization,"  April,  1918,  329-337.  "Subdivision  of 
Lands,"  etc.,  Nov.,  Dec,  1917,  677-678.  "Present  Agricultural  Conditions 
Affecting  Land  Settlement,"  Nov.,  Dec,  1919,  641-648. 

Japan. — "Results  and  Progress  of  the  Redivision  of  Lands  Admitting  of 
Cultivation,"  May,  1918,  409-432. 

Scotland. — "Land  Tenure,  Land  Court  and  Its  Work,"  June,  1917;  May, 
1919,  301-311.  "Workings  of  Small  Holdings  Act  of  1908  in  Scotland,  Eng- 
land, Ireland,"  July,  1916,  107-116. 

Ireland. — "Recent  Statistics  of  Land  Purchase  Credit,"  Dec,  1919,  627- 
636.    "Land  Purchase  Credit  in  the  Years  1912-1917,"  Mav,  1919,  280-301. 

Sndtzerland.— "Land  Settlement  in,"  May,  1919,  311-319. 

Korea. — "State  Tenants  Association,"  June,  July,  1919,  351. 

/^'rance.— "Consolidation  of  Strips,"  May,  1916,  116-129.  "Law  of  1918. 
Redivision  of  Lands,"  Nov.,  Dec,  1918,  933-938. 

Germany. — "Colonization,"  March,  1916,  124.  "Prussian  Legislation  as 
to  the  Rentengiiter  and  Its  Results,"  etc.,  July,  1917,  41-46.  "The  Subdivi- 
sion of  Land  in  Old  Bavaria,"  April,  1917,  77-84. 

Hungary. — "Interior  Colonization  and  the  Future  of  Small  Property," 
Oct.,  1917,  72-77. 

Spain. — "Distribution  of  Rural  Property  and  Land  Settlement  in  Their 
Relation  to  the  Agrarian  Problem,"  May,  1916,  99-116. 

Paraguay. — "Private  Agricultural  Colonization,"  Feb.,  1916,  135-137. 

India. — Douie,  J.  M.:  "Land  Tenures  in  the  Punjab  in  Their  Original 
Form  and  as  Affected  by  British  Rule,"  July,  1917,  51-61. 

SerUa. — "Distribution  of  Landed  Property,"  Aug.,  1916,  110-118. 

Canada. — "Colonization  by  Pacific  Railway,"  Dec,  1916,  133.  "Coloni- 
zation of  Discharged  Soldiers,"  April,  1919,  232. 

Palestine. — "Jewish  Agricultural  Colonization,"  April,  1919,  206-223. 

United  States. — Hibbard  B.  H.:  "The  Settlement  of  PubUc  Lands  in  the 
United  States,"  January,  1916,  97-118.  Also  "Farm  Tenancy  in  the  United 
States,"  April,  1917,  90-100.  "Reclamation  of  Uncultivated  Land  for  Settle- 
ment of  Returned  Soldiers,"  Nov.,  Dec,  1919,  648-660.  "Large  Holdings  of 
Southern  Cahfornia,"  Aug.,  Sept.,  Oct.,  1919,  574-578.  "Land  Tenure  and 
the  Organization  of  Agriculture  on  Indian  Reservations,"  May,  1917,  63-77. 

"Russian  Land  Reforms,"  4  (1914)  No.  2,  119-134,  Nov.;  5  (1914)  No.  1, 
132-160;  5  (1914)  No.  2,  137-147,  July. 


76  LAND  TENURE 

"Russian  Colonization  in  the  Caucasus,"  1908-1912,  1914,  125-140,  Oct. 

"Russian  Agricultural  Reforms,"  1915,  July,  97-118. 

"Siberian  Colonies,"  1915,  May,  96-115;  1915,  March,  111-126. 

"Home  Colonization  in  Finland,"  1913,  Feb.,  142-160. 

"New  Land  Reforms"  (Russian),  Nov.,  1913,  119-134. 

f'in/and.— "Distribution  of  Farms,"  July,  1914,  137-147. 

"Subdivisions  of  Land  in  Various  European  Countries,"  March,  1912, 
217-225. 

/Spain.— "Home  Colonization,"  Dec,  1912,  175-195. 

Switzerland. — ^"Restriping  of  Holdings,  Its  Present  State  and  Practical 
Results,"  March,  1913,  128-152. 

Holland. — ^"Bill  to  Enable  Laborers  to  Become  Proprietors  of  Land," 
July,  1912,  199-203. 

Belgium. — "Agricultural  Economy,  Including  Organization  of  Small  Rural 
Holdings,"  Dec,  1913,  94-100. 

Columbia. — '"Colonization,"  Aug.,  1915,  118  ff. 

Peru. — "Land  Question  and  Colonization,"  July,  1913,  140-154. 

Norway. — "Agricultural  Organization,  Large  and  Small  Holdings,"  Aug., 
1914,  145-154.     "Home  Colonization,"  July,  1913,  129-140. 

Prussia. — "Results  of  Legislation  on  Division  of  Lands  Held  in  Common, 
Uniting  Scattered  Strips,"  etc.,  June,  1911,  228-242;  July,  223-228.  "Home 
Colonization  in  Northern  Germany,"  May,  1913,  99-112;  Sept.,  95-119;  Oct., 
93-103.  "Purchase  and  Allotment  of  Landed  Estates  in  West  Prussia  and 
Posen,"  Dec,  1912,  133-174.  "A  New  Law  Against  Subdivision  of  Land," 
Oct.,  1912,  203-204. 

Austria. — "Restriping  of  Lands  in  Austria,"  April,  1912,  205-214.  "New 
Agricultural  Legislation,"  Feb.,  1913,  85-100;  May,  115-129.  "Farm  Ten- 
ancy," May,  1915,  75-81;  June,  95-103;  Aug.,  111-118;  Sept.,  77-85.  "Con- 
temporary Agricultural  PoHcy,"  March,  1915,  73-92. 

England. — "Compensation  to  Tenants,"  July,  1914,  89-103.  "Rural 
Depopulation,"  May,  1912,  163-186,  also  Jul}^  161-179. 

Scotland.— "Froposnl  for  Land  Reform,"  Sept.,  1915,  85-100. 

ITaZes.— "Proposals  for  Land  Reforms,"  Nov.,  1915,  97-106. 

Ireland.— "Congested  Districts  Board,"  Feb.,  1915,  103-128. 

South  Africa.— "Land  Settlement  Act  of  1912,"  April,  1915,  105-113. 
"Provisions  for  SmaU  Holdings,"  July,  1914,  103-109. 

India.— "Tenure,  Settlement,"  etc.,  Nov.,  1914,  125-141,  also  Dec,  85-99. 
"Holdings,  Partition,"  etc.,  Jan.,  1915,  102-121,  also  Oct.,  87-96. 

Australia. — "Various  Forms  of  Land  Settlement,"  March,  1913,  105-113, 
also  Aug.,  137-151.    "Land  Settlement  in  Victoria,"  Jan.,  1916,  85-97. 

France. — "Enquiry  in  Reference  to  Metayage,"  etc.,  Sept.,  1913,  120-140. 
"Position  of  Small  Holdings,"  July,  1912,  143-160. 

Mexico. — "Land  Tax,  Distribution  of  Rural  Landed  Property,"  Nov., 
1914,  141-148. 
>.         Denmark. — "Colonization,"  April,  1915,  89-95. 

10.  Carver:  "Selected  Readings  in  Rural  Economics."  Land  Ownership : 
Broderick,  "Law  and  Custom  of  Primogeniture,"  352;  Leslie,  "Land  Sys- 
tem of  France,"  410;  de  Laveleye,  "Land  Systems  of  Belgium  and  Holland," 
433;  Haggard,  "State  Small  Holdings  of  Denmark,"  478. 

Tenancy:  Holmes,  "Tenancy  in  the  United  States,"  487;  Hibbard, 
"Tenancy  in  (1)  North  Atlantic  States,"  498;  (2)  "Central  States,"  508;  (3) 
"Southern  States,"  523;  (4)  "Western  States,  536.  Same  in  Quarterly  Journal 
of  Economics,  X,  34;  XXV,  710:  XXVI,  105,  363;  XXVII,  482;  Bastable, 
"Irish  Land  Purchase  Act  of  1903,"  898-913.  Same  Quarterly  Journal  of 
Economics,  XVIII,  1. 


REFERENCES  77 

11.  HoLMAN,  C.  W.:  "Revolution  in  the  Rural  South — Story  of  the  Mili- 
tant Renters'  Union  andJts  Remarkable  Influence  in  SoHdifying  the  Tenants 
to  Resist  the  Aggressions  of  the  Landlords,"  Twentieth  Century  Magazine, 
May,  June,  1912. 

12.  Yearbook  Department  of  Agriculture.  Spillman,  W.  J.,  and  Golden- 
WEiSER,  E.  A.,  "Farm  Tenantry  in  the  United  States,"  1916,  321-347;  Hoijvies, 
Geo.  K.:    ''Movement  from  City  and  Town  to  Farms,"  1914,  257-275. 

13.  Mead,  Elwood:  "Government  Aid  and  Direction  in  Land  Settle- 
ment." Discussion  by  R.  T.  Ely,  G.  F.  Warren,  C.  F.  Marbut.  American 
Economic  Review,  March,  1918,  72-113  (Vol.  8,  No.  1). 

14.  Lease  Contracts — Crop  and  Livestock — in  Minnesota.  Grain  Growers 
Guide,  March  19,  1919. 

15.  Putnam,  George  E.:  "Agricultural  Credit  Legislation  and  the  Ten- 
ancy Problem." — American  Economic  Review,  Dec,  1915,  805-816  (Vol.  5, 
No.  4). 

16.  Lloyd,  O.  G.:  "Farm  Leases  in  Iowa."  Bulletin  159,  September,  1915, 
Iowa  Ag.  Exp.  Sta. 

17.  Wilcox,  E.  V. :  "Lease  Contracts  Used  in  Renting  Farms  on  Shares." 
Bulletin  650,  United  States  Department  of  Agriculture. 

18.  Grimes,  W.  E.:  "Farm  Leases  in  Kansas,"  Bulletin  221,  June,  1919, 
Ag.  Exp.  Sta.  Kansas. 

19.  Hudson,  Manley  O.  :  "Land  Tenures  and  Conveyances  in  Missouri," 
Uni.  of  Missouri  Bulletin,  Vol.  16,  No.  16,  June,  1915. 

20.  Johnson,  O.  R.,  and  Foard,  W.  E.:  "Land  Tenure"  (Survey  of  4 
Missouri  Townships).    Bulletin  121,  Dec,  1914,  Ag.  Exp.  Sta.,  Missouri. 

21.  Wilson,  James,  and  Wallace,  Henry:  "Agricultural  Conditions  in 
Great  Britain  and  Ireland."  (No  date).  Published  by  the  Iowa  Dept.  of 
Agriculture,  Des  Moines  (1913?). 

22.  Stewart,  Chas.  L.:  "Land  Tenure  in  the  United  States  with  Special 
Reference  to  Illinois."  University  of  IlUnois  Studies  in  the  Social  Sciences. 
Vol.  5,  No.  3,  1916. 

23.  Froley,  J.  W.,  AND  Smith,  C.  Beaman:  "A  System  of  Tenant  Farm- 
ing and  Its  Results."  Farmers'  Bulletin,  Department  of  Agriculture,  Wash- 
ington, 1911. 

24.  "Industrial  Commission."    Vol.  X,  cvi-cx;  Vol.  XIX,  96-105. 

25.  "Survey"  (magazine),  April  17,  1915,  63-64. 

26.  "United  States  Commission  on  Industrial  Relations,  FinalReport,"  1916. 

27.  SiGERSON,  G.:   "Land  Tenures  of  Ireland,"  1871. 

28.  Kay,  Jos.:    "Free  Trade  in  Land,"  1880. 

29.  "Corporation  Farming."  Commerce  and  Finance,  Aug.  23, 1916;  Dec, 
13,  1916.    "Dakota  Farmer,"  Sept.  15,  1916. 

30.  "Annual  Report,  Secretary  of  the  Interior,"  Washington,  1918. 

31.  Torrens  Title.  Niblac,  W.  C:  "Torrens  System,"  1903;  Cameron, 
A.  G.:  "The  Torrens  System,"  1915;  "Laws  Relating  to  Rural  Credit  and 
Land  Registration,"  64  Cong.  1  Sess.  Sen.  Doc.  351. 

32.  "The  Lease  Contract  "—Foard's  Dairyman,  Feb.  6,  1920.  Black, 
J.  p.:  "Landlord's  and  Tenant's  Share."  Black,  J.  D,:  "Share  Leases  for 
Dairy  Farms."    "Iowa  Stock  Share  Leases."    "Dairy  Farm  Lease." 

33.  Jackson,  T.  C.  (3d.  ed.):  "Agricultural  Holdings  and  Tenant  Right 
Valuations,"  Preface;  1-6;  181-344,  1917. 

34.  "Farm  Lease  for  Grain  Farming" — Suggestion  from  University  of 
IlUnois.    Banker-Farmer,  Jan.,  1920,  p.  10. 

35.  "Where  Does  Tenancy  Lead?"    Banker-Farmer,  Jan.,  1920,  p.  12. 

36.  "Anti-rent  War  in  New  York,"  1844.  Niles  Register,  Vol.  67,  pp. 
256,  272. 


78  LAND  TENURE 

37.  "Scully  Lands  in  Kansas."  Commercial  West,  Feb.  15,  1919,  p.  40. 
Compare  large  holdings  in  Argentina,  Daily  Consular  and  Trade  Report, 
No.  165.    July  16,  1919,  334-335. 

38.  ''Small  Farms  for  Uruguay" — the  beginning  of  the  subdivision  of  the 
large  estates.    Monthly  Consular  and  Trade  Reports.    June,  1909,  86. 

39.  Mead,  Elwood:  "Summary  of  Soldier  Settlements  in  English  Speak- 
ing Countries,  Department  of  the  Interior,"  Washington,  1918. 

40.  "Land  Settlement  in  the  Mother  Country."  Issued  by  the  English 
and  Scottish  Boards  of  Agriculture  with  the  approval  of  the  Admiralty  and 
War  Office,  1919. 

41.  "Renting  Land  in  Missouri,  etc.,  with  Model  Forms  of  Lease."  Bulle- 
tin 167,  Agricultural  Experiment  Station,  Columbia,  Mo.,  February,  1920. 

APPENDIX 

Corporation  Farming. — Corporation  farming  is  now  being  conducted  in 
many  speciahzed  crops  in  the  United  States.  As  an  instance  of  this,  mention 
may  be  made  of  the  American  Fruit  Growers,  Inc.,  with  headquarters  at  Pitts- 
burgh, Penn. 

The  fruit  and  vegetable  industry  in  the  United  States  ranks  next  to  grain 
and  meat  in  the  volume  and  value  of  the  food  produced.  The  annual  volume 
of  fruits  and  vegetables  marketed  aggregates  more  than  750,000  car  loads, 
and  the  annual  value  of  this  volume  is  some  three  bilhon  dollars.  Tremendous 
wastes  have  been  common  in  this  trade,  due  to  poor  packing,  poor  distribution, 
and  other  marketing  defects. 

The  corporation  above  named  owns  and  operates  apple  orchards  and  apple 
packing  houses  and  is  also  in  the  distribution  business,  to  the  end  that  certain 
savings  and  economies  may  be  introduced  in  standardizing  and  stabilizing 
various  departments  of  this  great  industry. 

Henry  Wallace  on  Farm  Tenancy.— "Productive  value  cannot  be  main- 
tained under  our  present  system  of  leasing. 

"It  is  useless  to  attempt  to  develop  a  social  value  when  half  our  lands  are 
farmed  by  an  unstable  population. 

"Country  schools  are  declining  in  efficiency  .  .  .  and  will  so  long  as  our 
present  system  of  leasing  continues. 

"Many  leases  are  simply  conspiracies  against  the  voiceless  land  to  rob 
it  .  .  .  The  land  is  silent  now,  but  bides  its  time  and  takes  its  sure  revenge." — 
Henry  Wallace,  Address  before  Banker  Farmer  Conference,  Chicago,  1915, 


APPENDIX 


79 


Farm  Mortgages. ^-Per  Cent  of  Farms  Mortgaged,  Arranged  in  Order  of  Per 
Cent  Mortgaged,  Showing  Changes,  if  Any,  in  Twenty  Years 


1910 

1900 

1890 

Iowa      51.8 

Iowa      53.0 

Kans.    55.5 

50  per  cent — 59  per  cent 

Wis.       51.4 

N.  J.      51.9 

Iowa      53.3 

N.  D.     50.9 

S.  D.      52.4 
Neb.       52.0 

N.  J.      49.6 

Mich.    48.3 

Mich.     49.4 

Mich.     48.2 

Vt.         46.9 

N.  J.      48.9 

Vt.         46.9 

N.  Y.     46.3 

N.  D.     48.7 

Minn.    46.3 

Wis.       45.8 

Minn.    46.4 

Mo.        46.3 

Neb.       45.4 

Vt.          44.3 

40  per  cent — 49  per  cent 

Kans.     44.8 

Minn.    44.8 

N.  Y.     44.2 

N.  Y.     43.7 

Mo.        42.4 

Wis.       42.9 

Okla.      43.5 

Kans.     41.8 

Conn.     43.2 

Conn.    40.7 

Mass.     40.9 

Cal.        40.5 

1 

Neb.      39.4 

ni.          39.3 

111.          36.7 

111.          39.2 

Mass.     38.6 

Mo.        36.4 

Ind.        38.8 

Md.        36.8 

Ind.        33.1 

S.  D.      38.2 

S.  D.      36.7 

Cal.        32.5 

Del.        37.2 

Del.        36.5 

Conn.    31.1 

Md.        36.4 

Ind.        36.5 

Mass.     30.5 

30  per  cent— 39  per  cent 

Wash.    34.1 

Pa.         32.3 

Md.        30.0 

Ore.        33.7 

Cal.        32.2 

U.  S.      33.6 

N.  D.     31.4 

Tex.       33.3 
Idaho    33.4 
Miss.      32.9 
Pa.         31.1 

U.S.      31.0 

R.  I.       29.6 

Ohio      29.8 

Del.        29.4 

Ohio      28.9 

R.  I.      27.1 

Ohio       28.9 

Ala.        26.9 

MLss.     27.1 

U.  S.      28.2 

Me.        26.6 

Colo.     27.0 

Penn.     27.4 

20  per  cent— 29  per  cent 

Colo.      26.4 
N.  H.     25.6 

Me.        26.7 
N.  H.     25.5 

Wash.    26.8 
Colo.      25.5 

S.  C.      24.0 

Ore.        25.2 

Ore.        23.4 

Utah      22.9 

Tex.       23.4 

Me.        22.1 

Ark.       21.4 

Wash.    21.7 

N.  H.     21.8 

Mont.    21.1 

S.  C.      20.6 

Wyo.      19.7 

Nev.      19.3 

R.  I.       19.1 

Ky.         19.6 

Ala.        19.2 

Nev.       17.2 

Ga.         19.0 

La.          17.7 

Idaho     16.3 

La.          19.0 

Idaho     16.4 

Mont.    15.6 

N.  C.     18.5 

N.  C.     15.8 

W.  Va.  13.0 

Tenn.     16.9 

Ky.         15.2 

Wyo.      13.0 

Nev.       16.7 

Va.          14.7 

10  per  cent— 19  per  cent 

Va.         16.0 

Ga.         14.7 

Fla.        14.8 

Ark.        14.3 

Ariz.       12.9 

W.  Va.  14.1 

W.  Va.  12.6 

Mont.    14.0 
Wyo.      12.2 
Tenn.     11.5 
Utah      11.1 
Fla.        10.3 

N.  M.      5.4 

Okla.       9.2 

S.  C.        S.O 

Ariz.         6.9 

Miss.        7.7 

N.  M.      2.3 

Ariz.         6.8 
Tex.         5.7 
Utah        5.5 
N.  C.       4.9 
Ala.          4.4 

1  per  cent —  9  per  cent 

1 

Ark.         4.2 
Ky.          4.1 
La.           4.0 
Ga.           3.4 
Va.           3.2 
Tenn.       3.2 
N.  M.      3.0 
Fla.          2.9 

80 


LAND  TENURE 


Farm  Tenancy. — Per  Cent  of  Farms  Operated  by  Tenants,  Arranged  in  Order 
of  Per  Cents,  Showing  Changes,  if  Any,  in  Thirty  Years 


1910 

1900 

1890 

1880 

Miss. 

66.1 

Miss. 

62.4 

Ga. 

65.6 

S.  C. 

61.1 

60  per  cent — 69  per  cent 

S.  C. 
Ala. 

63.0 
60.2 

La. 

55.3 

Ga. 

59.9 

S.  C. 

55.3 

S.  C. 

50.3 

Okla. 

54.8 

La. 

58.0 

Ga. 

53.5 

50  per  cent — 59  per  cent 

Tex. 

Ark. 

52.6 
50.0 

Ala. 
Del. 

57.7 
50.3 

Miss. 

52.8 

N.  C. 

42.3 

Tex. 

49.7 

Ala. 

48.6 

Ala. 

46.8 

Del. 

41.9 

Ark. 

45.4 

Del. 

46.9 

Ga. 

44.9 

40  per  cent — 49  per  cent 

111. 

41.4 

Okla. 

43.8 

La. 

44.4 

Miss. 

43.8 

Tenn. 

41.1 

N.  C. 
Tenn. 

41.4 
40.6 

Tex. 

41.9 

Del. 

42.4 

Neb. 

38.1 

111. 

39.3 

N.  C. 

34.1 

Tex. 

37.6 

la. 

37.8 

Neb. 

36.9 

111. 

34.0 

La. 

35.2 

Kans. 

36.8 

Kans. 

35.2 

Ark. 

32.1 

Tenn. 

34.5 

30  per  cent — 39  per  cent 

Ky. 

33.9 

la. 

34.9 

Md. 

31.0 

N.  C. 

33.5 

Ind. 

30.0 

Md. 
Ky. 
Va. 
Mo. 

33.6 
32.8 
30.7 
30.5 

Tenn. 

30.8 

111. 
Ark. 
Fla. 
Md. 

31.4 
30.9 
30.9 
30.9 

Mo. 

29.9 

N.J. 

29.9 

Kans. 

28.2 

Va. 

29.5 

Md. 

29.5 

Ind. 

28.6 

la. 

28.1 

Mo. 

27.3 

Ohio 

28.4 

Ohio 

27.4 

N.J. 

27.2 

Ky. 

26.5 

Fla. 

26.7 

Fla. 

26.5 

Va. 

26.9 

N.J. 

24.6 

Va. 

26.5 

Pa. 

26.0 

Mo. 

26.8 

la. 

23.8 

20  per  cent — 29  per  cent 

N.J. 

24.8 

N.  Y. 

23.0 

Ind. 

25.4 

Ind. 

23J 

S.  D. 

24.8 

Cal. 

23.1 

Ky. 

25.0 

Pa. 

21.2 

Pa. 

23.3 

Colo. 

22.6 

Neb. 

24.7 

Minn. 

21.0 

W.  Va 

.21.8 

Fla. 

23.6 

N.  Y. 

20.8 

S.  D. 

21.8 

Pa. 

23.3 

Cal. 

20.6 

R.  I. 

20.2 

Ohio 

22.9 

W.  Va 

.20.5 

N.  Y. 

20.2 

Colo. 

18.2 

Ore. 

17.8 

R.  I. 

18.7 

R.  I. 

19.9 

R.  I. 

18.0 

Minn. 

17.3 

Cal. 

17.8 

Cal. 

19.8 

Mich. 

15.8 

Mich. 

15.8 

W.  Va 

.  17.7 

Ohio 

19.3 

Ore. 

15.1 

Vt. 

14.6 

Vt. 

14.6 

W.  Va 

.  19.1 

N.  D. 

14.3 

Wash. 

14.4 

Mich. 

14.0 

Neb. 

18.0 

Wis. 

13.9 

Wis. 

13.5 

S.  D. 

13.2 

N.  Y. 

16.5 

10  per  cent — 19  per  cent 

Wash. 

13.7 

Conn. 

12.9 

Minn. 

12.9 

Kans. 

16.3 

Nev. 

12.4 

Nev. 

11.4 

Ore. 

12.6 

Ore. 

14.1 

Vt. 

12.3 

Conn. 

11.5 

Vt. 

13.4 

Idaho 

10.3 

Wis. 
Colo. 

11.4 
11.2 

Ariz. 
Colo. 
Conn. 
Mich. 

13.2 
13.0 
10.2 
10.0 

Conn. 

9.8 

Mass. 

9.6 

Mass. 

9.3 

Nev. 

9.7 

Ariz. 

9.3 

N.  M. 

9.4 

Wash. 

8.5 

Minn. 

9.1 

Mont. 

8.9 

Mont. 

9.2 

N.  H. 

8.0 

Wis. 

9.1 

Wyo. 

8.2 

Utah 

8.8 

Ariz. 

7.9 

Mass. 

8.3 

Mass. 

8.1 

Idaho 

8.8 

Nev. 

7.5 

N.  H. 

8.1 

Utah 

7.9 

N.  D. 

8.5 

N.  D. 

6.9 

N.  M. 

8.1 

N.  H. 

6.9 

Ariz. 

8.4 

Me. 

5.4 

Wash. 

7.2 

1  per  cent — 9  per  cent 

N.  M. 

5.5 

Wyo. 

7.6 

Utah 

5.2 

Mont. 

5.3 

Me. 

4.3 

N   H. 

7.5 

Mont. 

4.8 

Idaho 

4.7 

Me. 

4.7 

Idaho 

N.  M. 

Wyo. 

Okla. 

4.6 
4.5 

4.2 
0.7 

Utah 
Me. 

S.  D. 
N.  D. 
Wyo. 

4.6 
4.3 
3.9 
3.9 

2.8 

APPENDIX  81 

Farm  Tenancy  in  Canada. — Per  cent  of  Total  Occupiers  Who  are  Tenants 


1891 
Per  cent 

1901 
Per  cent 

1911 
Per  cent 

15.42 

26.77 

9.47 

5.53 

10.32 

21.56 

11.87 

7.30 

7.22 

5.56 

12.90 

19.70 
6.25 
3.89 
11.08 
19.78 
9.94 
5.82 
1.93 
5.82 

11.40 

Provinces : 

British  Columbia     

14.19 

Alberta  

.7.95 

Saskatchewan 

Alanitoba 

9.26 
16.19 

Ontario 

17.68 

Quebec ^ 

7.72 
5.45 

Nova  Scotia 

4.66 

Prince  Edward  Island 

4.47 

Shifting  of  Farmers,  or  Term  Farmer  Spends  on  One  Farm, 
of  Farm  {Owners  and  Renters) 


Term  of  Occupancy 


5  Years  and 

over 

Less  than  4  years 

United  States 

48.24  per  c 

ent 

51.76  per  cent 
29.92 

New  England 

70.08 
63.34 
59.00 
49.59 
46.92 
46.67 
40.79 
39.93 
33.48 

Middle  Atlantic 

36.66 

East  North  Central.  .  .          

41  00       " 

West  North  Central 

50.41        " 

Pacific 

53.08 

South  Atlantic 

53.33 

East  South  Central 

59.21 

Mountain                                         .                 .  . 

60  07        " 

West  South  Central 

60.52 

Conference  of  the  Agricultural  Commission  of  the  American  Bankers  Association, 
Washington,  February  26-27,  1919 

Declaration  on  "Farm  Tenancy." — -"Farm  tenancy  is  a  constantly  in- 
creasing menace  to  a  permanent,  prosperous,  and  safe  agriculture,  and  a  con- 
tented country  life.  It  has  resulted  in  a  loss  of  the  priceless  fertility  of  the 
soil — ^the  creation  of  an  unsettled  farm  population — illiteracy — an  inefficient 
country  school  system — a  drift  from  farm  to  city — and  unprofitable  methods 
of  agriculture. 

"  Means  must  be  found  by  which  the  industrious  young  farmer  of  character 
and  skill  in  agriculture,  even  though  of  limited  financial  resources,  can  look 
forward  to  becoming  a  farm  owner. 

"This  conference  recommends  that  committees  on  agriculture  of  the 
bankers'  State  associations  give  serious  attention  to  methods  of  correcting 
this  dangerous  condition. 

"To  the  committees  is  suggested  the  advisability  of  selecting  a  banker 
leader  in  each  county  to  bring  together  farm  owners  and  tenants  to  devise 
means  for  the  purchase  of  farms,  utihzing  governmental  and  private  agencies. 

"The  committees  should  also  inspire  better  systems  of  leasing  that  will 
provide  protection  for  the  fertihty  of  the  soil,  longer  tenures,  and  provisions 
for  the  maintenance  of  livestock." — Banker  Farmer,  April,  1919,  p.  2. 


82  LAND  TENURE 

Relation  of  Tenancy  to  Land  Value.    Dear  Land  Means  More  Tenants.   Examples 

of  Largest  and  Smallest  Amount  of  Tenancy,  by  Rural  Counties,  in  Certain 
States;  Also  Average  Land  Values  in  Same  Counties.    1910  Census. 

Tenancy  Land  value 

Alabama:                                                                                          Per  cent  per  acre 

Average  for  State 60.2 $10.46 

Dallas  County 89.2 .      12.24 

Winston  County 23.7 4.24 

Georgia: 

Average  for  State 65.6 $13.74 

Dougherty  County 91.4 13.99 

Glynn  County 10.3 4.27 

Illinois: 

Average  for  State 41.4 $  95.02 

Ford  County 66.9 148.97 

Edwards  County 20.1 47.46 

Iowa: 

Average  for  State 37.8 $  82.58 

Grundy  County 56.7 117.36 

Allamakee  County 15.8 38.25 

Mississippi: 

Average  for  State 66.1 $13.69 

Leflore  County 95.4 43.64 

George  County 3.5 8.19 

Oklahoma: 

Average  for  State 54.8 $22.49 

Osage  County 89.2 13.21 

Cimarron  County 2.5 8.38 

South  Carolina: 

Average  for  State 63.0 $19.89 

Marlboro  County 80.4 52.76 

Georgetown  County 21.1 5.67 

Texas: 

Average  for  State 52.6 $14.53 

Robertson  County 69.7 15.62 

Winkler  County 0.8 5.22 

Wisconsin: 

Average  for  State 13.9 $43.30 

Rock  County 32.4 68.85 

Walworth  County 32.8 69.38 

Kewaunee  County  ^ 2.7 52.20 

Lincoln  County 2.9 31.69 

1  Kewaunee  County,  Wisconsin,  furnishes  an  interesting  exception  to  the  rule.    Here 
German  and  Bohemian  farmers,  owning  small  farms  of  high-priced  land,  are  in  the  majority. 


CHAPTER  VI 

ECONOMIC  CONDITION  OF  THE  FARMER 

Introductory. — Whatever  schemes  may  be  tried  to  induce 
people  to  go  back  to  the  land,  the  outstanding  fact  is  and  must 
ever  be  that  when  the  farm  pay^  people  will  flock  to  the  farm  with- 
out other  inducements.  The  industries  of  the  city  offer  greater 
economic  inducements  than  the  farm  does,  either  in  the  size  of 
income  or  in  the  certainty  or  continuity  of  income. 

Does  Farming  Pay? — It  is  difficult  to  measure  all  the  returns 
of  farming.  These  returns  include  among  other  things  such  non- 
measurable  things  as  independence,  since  the  farmer  has  no  em- 
ployer to  please;  joy  in  labor,  since  the  farmer  labors  for  himself; 
peace  of  mind,  since  panics  in  the  business  world  will  have  no 
influence  on  the  farm's  fertility.  But  the  tangible  return,  the  one 
which  can  be  measured,  is  the  economic  income.  This  economic 
income  goes  far  to  determine  the  farmer's  social  status  in  his 
community,  the  amount  of  leisure  at  his  disposal,  and  to  a  large 
degree  his  importance  and  opportunity  in  a  political  way.  It  is 
the  basic  underlying  factor  in  the  farmer's  life.  Therefore  the 
importance  of  this  question,  ''Does  Farming  Pay?" 

Income  of  $408  a  Year. — A  great  many  attempts  have  been 
made  to  estimate  the  farmer's  income;  many  investigations  and 
''surveys"  have  been  made.  The  Federal  government  carried 
on  a  careful  investigation  in  the  heart  of  our  great  farming  section, 
for  instance.  The  following  quotation  from  this  investigation 
illustrates  very  adequately  all  phases  of  this  very  complex  question  : 

"The  economic  condition  of  the  farming  population  is  a  matter  of  great 
concern  to  everybody.  According  to  the  last  census  (1910),  thirty-two  per 
cent  of  our  population  actually  live  on  the  farms,  and  the  efficiency  and  pros- 
perity of  these  directly  affect  the  condition  of  all  the  rest.  Farming  has  never 
been  regarded  as  a  very  remunerative  business,  and  there  have  been  obvious 
reasons  throughout  most  of  our  history  why  the  direct  and  immediate  returns 
could  not  be  large.  With  fertile  prairie  land  practically  free,  it  was  not  to  be 
expected  that  the  common  crops  would  bring  much  more  than  the  labor  cost 
of  producing  them  by  the  ordinary  methods,  for  while  there  is  a  great  oppor- 
tunity in  agriculture  for  the  use  of  intelligence  and  scientific  skill,  it  is  also 
true  that  routine  farming  can  be  learned  and  carried  on  by  anyone.  During 
the  period  when  good  lands  could  be  had  by  homestead  entry,  the  opportunity 
to  obtain  a  farm  free  was  in  itself  a  great  inducement  to  the  settlement  of 
vacant  lands,  and  a  factor  in  making  low  prices  on  farm  products. 

"With  the  passing  of  the  period  of  free  lands,  and  as  population  gained 
upon  farm  area,  the  prices  of  farm  products  began  to  advance.    A  pronounced 

83 


84  ECONOMIC  CONDITION  OF  THE  FARMER 

change  has  taken  place  since  the  decade  1890-1899,  with  the  result  that  there 
has  been  a  general  outcry  from  consumers  over  the  rise  in  the  cost  of  living. 
During  the  calendar  year  1913  the  twenty  principal  farm  staples  included  in 
the  price  tables  of  the  Bureau  of  Labor  averaged  165.8  per  cent  of  the  average 
level  of  the  same  commodities  in  the  period  1890-1899.  It  would  be  naturally 
supposed  that  with  this  advance  in  the  prices  of  his  products,  the  position 
of  the  farmer  must  have  improved;  but  it  is  seriously  argued  that  this  is  not  so. 
Statisticians  and  experts  are  contending  that  farming  is  still  a  business  of 
very  poor  returns." 

Bulletin  41  of  the  United  States  Department  of  Agriculture 
consists  of  a  report  of  a  survey  of  520  typical  farms  in  Indiana, 
Illinois  and  Iowa  made  by  representatives  of  the  Department. 
Of  these  farms  273  were  operated  by  the  owners,  and  it  is  reported 
that  after  allowing  five  per  cent  interest  on  the  capital  investment, 
these  owners  only  received  an  average  of  $408  per  year,  plus  house 
rent  and  food  supplied  by  the  farm,  for  their  labor  and  manage- 
ment. The  247  renters  did  better,  for  they  received  an  average 
of  $661,  but  this  was  because  the  landlords  received  only  3.5  per 
cent  interest  on  the  value  of  their  investment.  This  showing 
leads  the  investigators  to  the  conclusion  that  the  assertion  that 
farmers  are  making  large  profits  is  erroneous.  ''They  are  living 
on  the  earnings  of  their  investment  and  not  on  the  real  profits 
of  the  farm."    The  report  says: 

"As  farming  is  a  business,  investing  both  capital  and  labor,  the  farmer 
should  receive  a  fair  income  on  his  investment  as  well  as  wages  for  his  labor." 

The  problem  for  the  man  on  a  farm  is  no  different  from  that  of  the  man  in 
a  railroad  office  or  a  bank;  it  is  to  get  himself  into  the  class  that  is  above  the 
average  in  efficiency.  By  so  doing  he  will  not  only  benefit  himself  but  help 
to  raise  the  level  of  production  and  consumption  for  the  whole  community." 

An  Example  of  Successful  Farming. — One  of  the  well-known 
bankers  of  the  State  of  Iowa,  Mr.  Charles  Shade,  President  of  the 
First  National  Bank  of  Rock  Rapids,  having  referred  incidentally 
to  the  success  of  a  young  farmer  of  his  acquaintance,  as  an  example 
of  what  was  being  accomplished  by  industry  and  good  manage- 
ment in  the  business  of  farming  Iowa  soil,  was  asked  to  give  the 
account  in  writing  and  did  so,  adding  another  instance,  and  his 
statement  is  quoted  below.  It  was  written  without  reference  to 
the  above  discussion,  but  is  given  as  explaining  why  farming  lands 
have  been  advancing  in  value. 

"  The  young  man  referred  to  is  a  German  by  descent — ^was  born  and  reared 
in  our  own  country.  His  people  are  hard  working,  frugal  farmers  so  that  he 
has  had  the  proper  training  in  his  profession  and  has  been  taught  to  make 
the  most  of  his  opportunities  in  cultivating  the  soil.  His  name  is  John  Busch. 
The  story  runs  as  follows: 

"After  reaching  his  majority  he  began  farming  on  his  own  account  in  the 
Spring  of  1908  by  renting  80  acres  of  land  from  a  neighbor,  giving  one-third 


AN  EXAMPLE  OF  SUCCESSFUL  FARMING  85 

of  the  small  grain  and  paying  cash  rent  of  $4.00  an  acre  for  all  the  land 
put  into  corn.  His  father  gave  him  two  horses  and  he  used  his  father's  ma- 
chinery to  put  in  the  crop.  We  loaned  him  $600  to  be  used  in  buying  hogs 
and  cattle. 

"In  1909  he  rented  a  half  section  of  land  and  out  of  the  proceeds  of  his 
crop  of  1908  he  purchased  farm  machinery  of  his  own  and  more  horses.  The 
seasons  of  1909  and  1910  were  good  crop  years,  and  during  these  two  years  he 
added  more  stock  to  his  farm  and  more  fully  equipped  himself  for  the  handling 
of  320  acres  of  land  by  the  purchase  of  more  horses  and  more  machinery. 
During  all  of  this  time  we  continued  to  carry  him  on  the  first  loan  of  $600  by 
renewing  the  note  each  year,  he  paying  the  interest. 

"In  1911  we  loaned  him  an  additional  $500  making  his  total  indebtedness 
to  us  $1,100.  The  season's  crop  of  1911  was  very  large  and  the  price  was  good. 
Out  of  this  crop  he  sold  sufficient  amount  of  grain  to  pay  up  all  the  money 
borrowed  from  us  and  to  Hquidate  other  small  debts  he  had  made  in  buying 
machinery,  cattle,  horses  and  hogs,  so  that  in  the  Spring  of  1912  he  had  all 
of  his  debts  paid,  with  a  good  herd  of  cattle,  a  large  stock  of  hogs,  horses  and 
machinery  sufficient  to  carry  on  the  320  acre  farm.  The  crop  of  1912  was  not 
an  average  one,  so  that  the  profits  of  that  season  were  very  light.  He  continued 
farming  this  same  land  during  1913  and  1914,  putting  the  larger  part  of  it 
into  corn.  The  market  price  for  corn  was  large,  and  as  he  had  practically  all 
of  the  work  done  without  outside  help  other  than  one  additional  farm  hand, 
his  expenses  were  fight. 

"Out  of  the  crop  of  1913,  after  paying  current  expenses  and  without  selfing 
the  cattle  and  hogs,  he  had  about  $2,000  in  money  which  he  left  with  us 
on  deposit. 

"During  the  crop  season  of  1914  he  planted  200  acres  of  corn.  This 
crop  averaged  about  60  bushels  per  acre,  making  12,000  bushel  yield.  This 
corn  was  worth  better  than  50  cents  per  bushel.  The  accumulation  of  cattle 
and  hogs  had  been  very  rapid,  so  that  by  the  first  day  of  December,  1914,  out 
of  the  proceeds  of  this  crop  and  the  sale  of  cattle  and  hogs,  after  paying  current 
expenses  he  left  with  us  $5,000  additional  money,  making  in  all  $7,000. 

"He  purchased  a  160  acre  farm  in  November,  1914,  and  promised  to  pay 
for  it  $28,000,  eight  thousand  cash  down  and  long  time  on  the  balance  at  5  per 
cent.  The  land  was  deeded  to  him  and  he  gave  a  mortgage  back  for  $20,000. 
We  loaned  him  $1,000  for  sixty  days,  assisting  him  to  make  up  the  $8,000. 
In  January  he  disposed  of  hogs  sufficient  to  pay  back  to  us  the  $1,000.  So  that 
this  young  man  now  has  $8,000  paid  in  on  a  splendid  quarter  section  of  land 
which  is  well  improved  and  has  ten  years  to  pay  the  balance  of  it  at  5  per  cent. 
He  also  owns  eight  head  of  horses,  25  head  of  cattle,  20  head  of  brood  sows 
and  more  than  $2,000  worth  of  farm  machinery  with  seed  and  feed  ample  to 
carry  him  through  this  season. 

"I  make  an  estimate  of  the  value  of  his  personal  property  as  follows: 

8  head  of  horses  at  $150  per  head $1,200 

26  head  of  cattle  at  $60  per  head 1,500 

20  head  of  brood  sows  at  $25  per  head 500 

Farm  machinery 2,000 

Seed  and  feed 1,500 

Paid  on  land 8,000 

Total $14,700 

"Now  that  is  the  net  profit  from  his  farming  operations  in  six  seasons. 
When  you  take  into  account  that  this  young  man  started  empty  handed,  it 
seems  to  me  that  it  is  a  remarkable  case.  This  man  has  also  been  handicapped 
by  not  being  married  and  has  done  his  own  housekeeping. 

"I  also  have  another  case  which  I  might  cite  you  of  great  thrift  in  our 
territory.  It  is  that  of  Fred  Schimmel,  a  German  whose  ancestors  as  far  back 
as  I  know  were  farmers.     This  man  started  farming  in  1900  by  his  father 


86  ECONOMIC  CONDITION  OF  THE  FARMER 

giving  him  a  team  and  his  renting  80  acres  of  land.  In  1901  he  was  married. 
He  continued  to  rent  land,  giving  to  the  landlord  one-third  of  the  crop  raised 
on  the  land  until  1905  when  he  purchased  160  acres  of  land  at  $60  per  acre, 
making  a  payment  of  $3,000  at  the  time  of  the  purchase  with  a  promise  to  pay 
$500  per  year  and  interest.  He  moved  onto  this  farm  and  erected  good  build- 
ings during  the  next  3  years  besides  making  payment  of  his  $500  each  year 
and  interest.  In  1908  he  traded  this  land  for  a  half  section  of  land,  turning 
this  farm  in  at  $125  per  acre  and  taking  the  other  land  at  $120  per  acre.  Last 
January  he  refused  $48,000  for  this  land.  He  has  an  encumbrance  of  $16,000 
against  it.  He  also  has  a  short  horn  cattle  herd  of  65  head,  16  horses,  50  or  60 
head  of  hogs,  full  equipment  of  farm  machinery,  with  seed  grain  and  feed  to 
carry  him  more  than  one  year,  in  the  grainery.  Mr.  Schimmel  has  the  equiva- 
lent of  at  least  $40,000,  and  all  of  this  has  been  the  outgrowth  of  his  farming 
operations  in  14  years,  some  of  which  have  been  lean  years." 

Best  Practices  Popularized. — 'A  somewhat  similar  situation 
was  described  by  Bradford  Knapp  while  with  the  Department  of 
Agriculture.  Speaking  before  the  First  Annual  Conference  of  the 
Bankers  Committees  on  Agricultural  Development  and  Education 
at  Minneapolis  in  1911,  he  said: 

"The  great  problem  of  to-day  is  the  dissemination  of  existing  knowledge. 
That  is  true  not  only  of  agriculture  but  of  almost  every  other  human  endeavor. 
If  the  existing  knowledge  with  regard  to  human  health  were  known  and  com- 
monly practiced  by  the  people  generally,  the  ills  of  the  human  body  would  be 
much  decreased.  If  the  knowledge  that  is  in  existence  in  every  state  in  the 
tlnion  with  regard  to  the  best  and  most  successful  methods  of  conduct  of 
farms  were  to  become  the  common  practice  of  the  average  farmer,  the  agri- 
culture of  this  country  would  be  revolutionized.  In  every  community,  in 
every  county,  in  every  state,  you  will  find  farmers  who  are  making  a  distinct 
success  of  the  business  of  farming.  Also  in  every  community  you  will  find  men 
who  are  merely  scratching  the  surface  of  Mother  Earth  for  a  very  poor  exist- 
ence. It  is  a  lamentable  fact  that  the  best  practices  of  a  few  are  not  the 
common  practices  of  many.  In  every  community  we  find  farmers  of  poorer 
grade  who  are  pulhng  down  the  average  production  per  acre,  and  therefore 
whose  return  for  their  labor  is  very  low  indeed.  It  would  astonish  you  if 
you  were  to  look  into  figures  and  find  out  what  the  average  earning  capacity 
of  the  average  farm  worker  of  this  country  in  the  various  states  is  or  was. 
We  found  the  figures  for  the  year  1900,  I  cannot  give  you  the  exact  statistics 
for  1910  yet,  because  the  Census  Bureau  has  not  published  the  total  number 
of  farm  workers,  but  I  can  give  you  a  few  figures  for  the  year  1900;  for  example 
in  the  state  of  South  Carolina  the  average  earning  capacity  of  the  average 
farm  worker  was  but  $146  per  annum.  In  the  state  of  Iowa  in  that  year,  not 
including  the  Hvestock  industry  of  that  state,  it  was  a  trifle  over  $600  per 
annum,  and  in  North  Dakota  for  that  year  it  was  a  httle  over  $700  per  annum. 

"It  is  a  well  known  fact  and  appreciated  by  all  thinking  men,  that  the 
population  of  the  country  has  practically  stood  still,  or  advanced  very  little, 
while  the  population  of  our  cities  and  towns  of  over  two  thousand  population 
have  increased  enormously  simply  because  men  have  been  going  from  the  farms 
to  the  cities.  The  great  cities  and  centers  of  population  have  paid  tribute  to 
the  best  blood  that  has  been  upon  the  farm.  Without  going  into  the  figures 
to  show  these  things,  and  without  commenting  upon  the  statistics  which  could 
be  produced,  it  is  a  lamentable  fact  that  this  tendency  exists  to-day,  and  has 
existed  in  this  country  for  the  past  twenty  years. 

"If  you  were  to  ask  me  why  this  thing  has  been  I  would  say  it  was  for 
three  reasons. 


THE  "SURVEY"   METHOD  87 

1.  Because  the  average  earning  of  the  average  farmer  has  netted  too  small 
a  return  for  his  labor. 

2.  Because  he  lacks  education  and  social  advantages. 

3.  And  by  no  means,  least,  in  many  parts  of  the  country  what  he  did 
earn  was  earned  at  too  great  a  personal  sacrifice — labor  for  long  hours  and 
no  recreation." 

The  Farmer's  Income — Other  Estimates. — In  recent  years 
many  studies  have  been  made  of  the  farmer's  income.  Farmers' 
Bulletin  No.  746,  by  Goldenweiser/  is  one  of  the  best  estimates 
we  have,  because  it  is  based  on  several  different  investigations 
carried  on  by  various  bureaus  of  the  federal  government.  An 
exact  statement  in  money  of  the  farmer's  income  is  not  possible, 
since  the  farmer  has  such  earnings  as  house  rent,  value  of  foods 
and  fuel  supplied  by  the  farm,  and  other  earnings  not  on  the  money 
basis.  The  average  earnings  of  the  farmer,  says  this  Bulletin, 
are  about  $600,  made  up  of  cash,  $200,  and  about  $400  supplied 
by  the  farm.  This  $600  may  be  compared  with  the  $460,  earned 
by  the  factory  hand,  and  with  the  $663  earned  by  the  average 
clergyman.  About  two-thirds  of  the  farmers  are  landowners.  ''In 
view  of  the  lower  cost  of  living  on  the  farm,"  says  Goldenweiser, 
''and  the  fact  that  two-thirds  of  the  farmers  have  interest  in  addi- 
tion to  wages  it  appears  that  farmers,  as  a  class,  are  better  off 
than  the  majority  of  persons  engaged  in  other  pursuits."  Paul  L. 
Vogt,  formerly  of  Ohio  State  University,  one  of  our  trustworthy 
investigators,  discussed  the  farmer's  income  in  an  economic  maga- 
zine.^ He  shows  the  difficulty  of  comparing  a  farmer's  income 
who  combines  in  himself  three  factors  of  production  (ownership 
of  the  business,  management  of  the  business  and  the  labor)  with 
the  incomes  of  breadwinners  in  cities  where  these  factors  are  more 
sharply  differentiated.  Vogt  cites  average  farm  incomes  of  $439, 
$423,  and  other  amounts.  There  is  a  tendency,  he  says,  for  changes 
in  gross  income  to  manifest  themselves  in  rises  in  land  values 
rather  than  in  labor  income.  He  also  sees  a  tendency  toward 
equalization  of  labor  incomes  in  all  parts  of  the  country.  His 
conclusions  are  that  the  farmer  now  is  better  off  than  the  great 
majority  of  breadwinners  in  the  cities,  and  is  also  better  off  than 
such  salaried  professional  men  as  clergymen  and  school  teachers. 

The  "  survey  "  method  of  determining  the  farmer's  income  has 
come  into  vogue  very  much  in  recent  years,  particularly  since  the 
publication  of  that  very  able  piece  of  farm  management  pioneering 

^  Farmers'  Bulletin  No.  746.  United  States  Department  of  Agriculture, 
July  6,  1916. 

2  The  Farmers'  Labor  Income.  Paul  L.  Vogt;  American  Economic  Review, 
Dec,  1916. 


88  ECONOMIC  CONDITION  OF  THE  FARMER 

in  this  field  by  Professors  G.  F.  Warren  and  K.  C.  Livermore  of 
Cornell  University,  namely,  ''An  Agricultural  Survey,  Townships 
of  Ithaca,  Dryden,  Danby,  and  Lansing,  Tompkins  County,  New- 
York,"  and  published  in  March,  1911,  as  Bulletin  295.  Since  this 
survey  covers  a  partially  deforested  area,  very  much  the  worse 
for  the  wear  and  waste  of  a  century,  and  competing  but  badly 
with  the  fresh  lands  of  the  newer  states,  this  study  may  be  said 
to  represent  about  the  average  conditions  of  New  York  State. 
The  principal  topics  covered  in  this  survey  are  as  follows :  profits, 
capital,  receipts,  expenses,  size  of  farms,  value  per  acre,  soils, 
distance  from  market,  labor,  crops,  woodlot,  livestock,  dairy 
herds,  poultry,  bees,  systems  of  farming,  forms  of  tenure,  women 
as  farmers,  education  of  farmers,  size  of  farm  families,  abandoned 
farms,  farm  buildings,  roads,  rural  free  delivery  of  mail,  telephones, 
farm  as  a  home  for  persons  otherwise  employed,  summary  of 
recommendations.  While  the  survey  is  primarily  an  economic 
study,  yet  it  does  deal  to  a  small  extent  with  other  social  problems, 
such  as  education,  transportation  and  communication.  However, 
the  chief  point  of  interest  to  be  emphasized  here  is  the  "labor 
income"  of  the  farmer.  On  the  615  farms  operated  by  owners, 
the  average  labor  income  was  found  to  be  $423;  on  the  134  farms 
operated  by  tenants  the  labor  income  was  $379. 

The  various  terms  used  in  this  study,  such  as  ''labor  income," 
"capital,"  etc.,  are  all  clearly  defined.  The  more  important  defi- 
nitions are  the  following: 

"  Capital  includes  the  value  of  all  farm  property,  land,  houses, 
buildings,  stock,  feed,  seed,  tools  and  cash  necessary  to  keep  the 
farm  running.  It  does  not  include  house  furnishings  that  are  not 
used  in  farming.  The  average  of  the  amount  at  the  beginning  and 
at  the  end  of  the  year  is  considered  to  be  the  capital  invested  in 
the  business." 

"  Receipts  include  all  money  received  from  the  sale  of  any 
farm  products,  also  receipts  from  outside  work,  rent  of  farm  build- 
ings, etc.  If  the  value  of  the  buildings,  stock,  produce,  or  equip- 
ment is  greater  at  the  end  of  the  year  than  at  the  beginning,  the 
difference  is  considered  a  receipt." 

"  Expenses  include  all  farm  expenses.  If  the  value  of  the 
buildings,  stock,  produce,  or  equipment  at  the  end  of  the  year  is 
less  than  at  the  beginning,  this  loss  is  included  with  expenses. 
Household  or  personal  expenses  are  not  included,  but  the  value  of 
board  furnished  to  hired  help  is  counted.  Expenses,  therefore, 
include  all  business  expenses.    Taxes  are  not  included  in  expenses. 


CALCULATING  LABOR  INCOME  89 

"  Farm  income  is  the  difference  between  receipts  and  expenses. 
This  is  the  net  return  as  a  result  of  the  use  of  the  capital  and  unpaid 
labor.  It  does  not  represent  what  the  farmer  earned,  because  both 
the  farmer  and  his  money  were  working.  In  order  to  see  what  was 
produced  by  the  unpaid  labor,  we  must  subtract  the  amount  that 
the  capital  would  have  earned  if  placed  at  interest." 

"  Income  from  xmpaid  labor  is  the  farm  income  less  5  per  cent 
interest  on  the  capital." 

"  Labor  income. — Often  the  farmer  is  helped  in  the  farm  work 
by  members  of  his  family.  If  such  help  has  been  given,  the  amount 
that  it  would  have  cost  to  hire  it  is  deducted  from  the  income  from 
unpaid  labor  in  order  to  get  the  amount  that  the  farmer  earned 
by  his  own  labor.  If  a  farmer's  labor  income  is  $500,  it  means  that 
as  a  result  of  his  year's  work  he  has  made  5  per  cent  interest  on 
his  capital  and  has  cleared  $500  above  all  farm  expenses,  besides 
having  the  use  of  a  house  and  such  farm  produce  as  the  farm  furn- 
ished for  consumption  in  the  house.  I'his  figure  can,  therefore, 
be  compared  with  wages  paid  to  a  hired  man  who  is  given  a  house, 
garden,  etc." 

These  definitions  are  stated  in  simple,  direct  terms,  familiar 
to  farmers  who  are  not  learned  in  the  mysteries  of  accounting 
principles  and  practices.  Modern  farm  accounting,  it  may  be 
added,  is  as  yet  neither  a  science  nor  an  art.  Hence  these  defini- 
tions quite  naturally  run  counter  to  certain  usages  observed  by 
some  accountants  in  other  lines  of  business.  However,  the  account- 
ants do  not  agree  among  themselves. 

Calculating  Labor  Income. — The  following  case  from  the  survey 
above  described  illustrates  concretely  the  method  of  determining 
the  farmer's  ''labor  income": 

Capital  invested $10,183 

Receipts 3,494 

Made  up  as  follows: 

Crops $766 

Stock 536 

Stock  products 2083 

Inventory  increase 109 

Expenses 1,323 

Farm  income $2,171 

Interest,  5  per  cent  on  capital 509 

Labor  income $1,662 

It  will  be  observed  that  interest  on  ''capital  invested"  is  deducted 
in  arriving  at  the  farmer's  labor  income.  This  is  correct.  Account- 
ing practice  in  other  lines  of  business  which  refuses  to  allow  interest 
on  investment  as  one  of  the  legitimate  items  of  expense  seems  to 
be  an  error.    Obviously  the  farmer  could  invest  his  capital  in  bonds 


90  ECONOMIC  CONDITION  OF  THE  FARMER 

and  secure  a  job  (or  a  ''position  ")  yielding  him  wages  (or  ''salary"). 
The  above  statement  of  income  makes  no  allowance  for  the  rent 
of  the  house  which  the  farmer  occupies  or  for  the  garden  truck 
and  general  farm  produce  which  he  consumes  at  his  table.  This 
fact  must  be  borne  in  mind  when  comparing  "labor  income"  on 
the  farm  and  labor  income  in  the  city.  The  value  of  the  house  and 
garden  is  very  difficult  to  determine  with  any  approach  to  accuracy. 
In  Farmers'  Bulletin,  635,  the  Federal  Department  of  Agriculture 
has  attempted  to  find  the  value  of  the  farm-grown  foods  consumed. 

What  the  Farm  Contributes. — The  Farmers'  Bulletin,  635,  con- 
sidered the  interesting  subject  of  what  the  farm  contributes  directly 
to  the  farmer's  living.  If  it  were  not  for  those  products,  says  this 
bulletin,  contributed  by  the  farm  without  any  actual  cash  expendi- 
ture, a  great  many  farmers  would  not  have  a  comfortable  living. 
Extensive  investigations  relative  to  the  profits  in  farming  indicate 
that  the  average  labor  income  of  the  farmer  probably  differs  little 
from  ordinary  farm  wages,  but  in  addition  to  this  he  has  the 
"products"  contributed  by  the  farm.  Statistics  were  secured  by 
means  of  a  house-to-house  canvass  among  483  families  living  in 
ten  states.  An  earnest  effort  was  made  to  get  a  faithful  estimate 
of  the  amount  which  the  farm  itself  contributed.  The  conclusion 
was  reached  that  the  average  annual  price  of  food,  fowl,  oil  and 
shelter  actually  consumed  by  our  farmers  was  $595.08,  of  which 
$421.17  was  furnished  by  the  farm  and  the  balance  purchased. 
The  "  family  ration "  varies  not  only  with  the  season  of  the 
year,  but  also  from  state  to  state.  The  consumption  of  cereals 
varies  with  the  fancies  of  the  individual  families.  Approximately 
one  head  of  poultry  per  month  for  each  person  is  the  average  for 
all  sections.  Each  person  consumes  annually  3.1  bushels  of  apples. 
In  the  southern  states  more  sweet  potatoes  than  Irish  potatoes 
are  used.  The  average  consumption  per  person  for  all  sections 
is  5.7  bushels  of  Irish  and  one  bushel  of  sweet  potatoes.  For  those 
sections  not  using  sweet  potatoes,  the  average  consumption  of 
Irish  potatoes  is  7.3  bushels  per  person.  The  house  labor  is  per- 
formed chiefly  by  members  of  the  family,  only  4  per  cent  being 
hired.    The  average  annual  value  of  this  labor  is  $203  per  family. 

Comparison  With  City  Incomes. — The  farmer's  "labor  income" 
has  been  found  in  many  different  States,  under  many  varying 
conditions,  by  means  of  the  "survey"  method.  These  surveys 
omit  certain  very  definite  and  tangible  parts  of  the  farmer's  income, 
such  as  his  garden  produce,  and  also  omit,  as  imponderable,  what 
may  be  termed  his  psychic  income.    It  must  be  borne  in  mind  in 


EDUCATION  AND  HEALTH  91 

this  connection,  that  all  similar  statements  of  the  city  man's 
income  omit  certain  factors  of  his  income  which  are  very  real  and 
very  important,  and  yet  cannot  be  stated  in  terms  of  dollars  and 
cents.  To  turn  first  to  the  commoner  '^ public  utilities"  of  the 
city,  which  the  city  man  enjoys,  and  for  which  he  says  he  pays 
in  the  form  of  taxes  or  otherwise. 

City  versus  Country. — The  city  man  has  the  use  of  city  water, 
sewers  and  electric  lights.  For  these  he  pays  a  certain  amount  of 
money,  to  be  sure.  But  would  not  any  farmer  gladly  pay,  not 
merely  what  the  city  man  pays  for  these  services,  but  at  least  three 
times  what  the  city  man  pays,  if  these  services  could  be  had  in  his 
farm  house?  Few  farm  homes  can  afford  modern  conveniences. 
A  recent  rural  survey  in  Iowa  ^  listed  the  following  modern  con- 
veniences sometimes  found  in  farm  homes:  running  water;  bath 
tubs;  indoor  toilets;  electric  lights;  power  washing  machines; 
electric  irons;  furnace  heat;  refrigerators.  While  these  are  very 
rare  in  farm  houses,  they  are  fairly  common  in  city  homes.  In 
favor  of  the  city  home  may  be  named  the  delivery  of  groceries, 
of  ice,  milk,  etc.,  the  use  of  sidewalks,  and  pavements,  street  car 
service,  etc.  Other  attractions  furnish  the  city  man  a  ''psychic 
income,"  but  which  can  be  enjoyed  by  the  country  man  only  at 
the  sacrifice  of  time  and  money  necessary  to  bring  him  to  the  city. 
These  attractions  include  the  theater,  opera,  concerts,  amusements, 
moving  picture  shows,  lectures,  clubs,  libraries,  art  galleries, 
museums,  etc. 

Education  and  Health. — But  far  more  important  than  any  of 
these  factors  are  two  others,  namely,  medical  aid  and  education. 
The  country  child  cannot  secure  an  education  in  the  country. 
The  few  country  children  who  do  go  on  with  their  schooling  beyond 
the  pathetic  ''education"  they  secure  in  the  "little  red  school 
house,"  usually  do  so  only  through  some  sacrifice  on  the  part  of 
their  parents,  such  as  renting  a  temporary  home  in  the  city  (thus 
maintaining  two  homes  at  a  financial  sacrifice),  or  such  as  paying 
for  the  board  and  room  of  the  child  in  the  city  (thus  seeing  with 
anguish  of  heart  a  child  of  tender  years  go  from  the  protecting 
shelter  of  the  home,  that  he  may  enjoy  the  education  that  is  free 
to  the  city  child).  The  factor  also  of  medical  attention  must  not 
be  forgotten  in  this  connection.  It  is  certainly  well  known  that 
hospitals  are  not  found  in  the  country;  that  medical  aid  when  sum- 

3  Bulletin  No.  184,  Iowa  State  College  of  Agriculture,  "A  Rural  Social 
Survey  of  Orange  Township,  Blackhawk  County,  Iowa."  December,  1918, 
by  George  H.  von  Tungeln. 


92  ECONOMIC  CONDITION  OF  THE  FARMER 

moned,  particularly  in  the  night,  is  slow  to  arrive,  or  may  not  come 
at  all.  Indeed  many  country  homes  do  not  use  the  services  of  a 
doctor  at  all,  but  depend  in  part  on  neighbors  (particularly  in 
obstetric  cases)  and  partly  on  the  Hberal  use  of  ''patent  medicines." 
True,  these  patent  ''pain  killers,"  rheumatism  "cures,"  cancer 
"cures,"  rupture  "cures,"  blood  "purifiers"  are  so  adroitly  adver- 
tised in  most  rural  papers  (and  in  some  "respectable"  (?)  periodi- 
cals) that  the  readers  are  converted  to  the  belief  that  their  symp- 
toms, under  their  own  diagnosis,  show  them  to  have  these  dire 
diseases.  Hence  not  only  is  money  wasted  for  useless  nostrums, 
but  physical  and  mental  harm  is  done  by  consuming  various 
chemical  mixtures  for  imaginary  diseases.  The  city  man  is  near 
a  doctor,  and  usually  near  one  or  more  good  doctors.  Likewise, 
in  cities  of  any  size,  hospital  facilities  are  available,  and  trained 
nurses.  It  is  only  natural,  therefore,  that  the  city  born  and  bred 
youth  to-day  is  more  fit  physically,  than  the  country  born  and 
bred  youth. 

Other  Attractions. — Given  enough  income,  the  farmer  can  have 
a  "modern"  house  with  most  of  the  city  conveniences.  But  this 
means  an  income  considerably  in  excess  of  that  now  received  by 
the  average  farmer.  Other  attractions  of  the  city,  however,  he 
can  have  only  by  going  to  the  city,  just  as  the  city  man  can  enjoy 
certain  pleasures  of  life  only  by  going  to  the  country. 

Conclusions. — Considering  the  risks  involved  and  the  amount 
of  labor  and  capital  expended,  the  farmer's  economic  income 
is  too  low.  Economic  income,  it  is  necessary  to  emphasize,  is 
used  here  in  a  strict  sense.  What  other  income  has  the  farm 
family?  The  sociological  economists  have  worked  out  a  trinity  of 
happiness  which  comprises  these  three  factors:  Health,  home, 
security  of  income.  Health  is  considered  the  chief  requisite  to 
the  human  being's  happiness.  Without  this  he  would  be  unhappy 
under  any  conditions.  The  home  is  considered  essential  to  a  fully 
developed  human  personality.  Security  of  income  but  not  a  big 
income  is  considered  essential  to  a  certain  degree  of  peace  of  mind 
which  contributes  to  his  happiness.  To  these  three  factors  we 
must  add  a  fourth,  namely,  hope.  The  individual  must  see  an 
opportunity  for  himself  or  at  any  rate  for  his  offspring  to  rise  to  a 
higher  level  than  that  which  he  at  the  moment  occupies  (Fig.  12). 
This  ambition  need  not  be  economic  but  may  be  social,  educational, 
political  or  of  any  other  kind  which  will  bring  some  recognition  to 
the  individual.  Does  the  farm  promise  to  satisfy  these  four  funda- 
mental needs  as  completely  as  the  city  promises  to  satisfy  them? 


CONCLUSIONS 


93 


The  judgment  of  those  competent  to  speak  seems  to  differ  on  this 
point.  An  authority  in  American  education,  reared  as  a  boy  on 
the  farm,  educated  in  a  common  country  school  and  in  the  State 
University,  a  traveler,  a  sojourner  in  many  great  cities  and  finally 
Dean  of  the  School  of  Education  in  a  State  University,  has  given 
us  his  conclusions  in  the  book  entitled  ''Rural  Life  and  the  Rural 
School."  In  this  book  he  points  out  all  the  shortcomings  of  country 
life.  Then,  turning  to  the  other  side  of  the  picture,  he  shows  that 
there  are  fewer  hours  of  labor  than  formerlv  on  the  farm,  that  the 


A  prosperous  Icelandic  farmer  and  son  in  North  Dakota. 


mental  factor  is  growing,  that,  so  far  as  the  boy  is  concerned,  the 
farm  boys  enjoy  time  to  go  fishing,  hunting,  skating,  coasting, 
trapping;  that  he  learns  the  ways  and  habits  of  beasts,  birds  and 
fishes;  that  the  lessons  now  taught  to  the  Boy  Scouts  with  so  much 
effort  and  learned  easily  and  early  by  the  farm  boy,  that  even  his 
daily  and  regular  work  under  most  strenuous  conditions  is  of  a 
large  and  varied  kind — not  like  the  making  of  one-tenth  of  a  pin, 
which  has  a  tendency  to  reduce  the  worker  to  one-tenth  of  a  man. 
''On  the  farm"  says  this  writer,  "the  worker  begins  and  finishes  a 
piece  of  work.  He  sees  it  through.  The  whole  of  it  receives 
expression  in  him.  It  is  his  piece  of  work,  and  it  faces  him  as  he 
has  to  face  it.  The  tendency  is  for  both  to  be  honest."  In  view 
of  the  circumstances  and  opportunities  just  mentioned,  life  in  the 


94  ECONOMIC  CONDITION  OF  THE  FARMER 

country  is  the  best  and  most  complete  life  possible  to  a  human 
being.  ''Country  life"  continues  this  writer,  "is  the  best  cradle 
of  the  race.  To  have  a  good  home  and  rear  a  family  in  the  heart 
of  a  great  city  is  well-nigh  impossible  for  the  average  laboring  man. 
The  struggle  for  existence  is  too  fierce,  and  the  opportunity  in 
childhood  and  youth  for  self-expression  and  initiative  is  too  meager. 
The  environment  is  too  vast,  complex  and  overwhelming,  with 
nothing  worth  while  for  the  child  to  do.  Individuals  may  stand, 
but  generations  will  slip  on  such  an  inclined  plane  of  life."  ^  While 
the  surface  attractions  of  the  city  are  more  alluring,  yet  country 
life  is  "the  finest  life  on  earth"  is  the  Dean's  conclusion. 

We  have  already  mentioned  in  this  book  that  George  Washing- 
ton was  a  successful  farmer.  He  enjoyed  not  only  the  economic 
but  all  the  other  returns  of  agriculture.  In  the  closing  years  of 
his  life  he  wrote  as  follows  to  the  great  English  student  of  farming, 
Arthur  Young:  "The  more  I  am  acquainted  with  agricultural 
affairs  the  better  I  am  pleased  with  them,  insomuch  that  I  can 
nowhere  find  so  great  satisfaction  as  in  those  innocent  and  useful 
pursuits.  In  indulging  these  feelings,  I  am  led  to  reflect  how  much 
more  delightful  to  an  undebauched  mind  is  the  task  of  making 
improvements  on  the  earth  than  all  the  vain  glory  which  can  be 
acquired  from  ravaging  it  by  the  most  uninterrupted  career 
of  conquest." 

QUESTIONS  ON  THE  TEXT 

1.  What  is  the  significance  of  the  economic  factor  in  drawing  people  to  or 

away  from  the  farm? 

2.  Does  farming  pay?    What  factors  are  to  be  considered  in  answering  this 

question? 

3.  Cite  the  findings  of  a  federal  "survey"  giving  the  farmer's  annual  income. 

Does  this  study  include  the  value  of  house  rent  and  the  use  of  a  garden? 

4.  Cite  the  examples  of  successful  farming  given  by  Mr.  Shade. 

5.  According  to  Bradford  Knapp  what  is  the  great  problem  of  to-day?  Give 

the  facts  on  which  he  bases  his  statement.    State  his  three  reasons  for 
the  city  drift  of  population. 

6.  Cite  Goldenweiser's  conclusions  as  to  the  relative  prosperity  of  the  farmer. 

7.  Cite  the  conclusions  of  Vogt  on  the  same  subject. 

8.  Explain  the  "survey"  method,  as  exempUfied  by  Warren  and  Livermore. 

Define  these  terms:     capital;  receipts;  expenses;  farm  income;  labor 
income. 

9.  What  has  been  the  estimated  money  value  of  those  products  contributed 

by  the  farm  to  the  farmer's  living? 

10.  Show  difficulty  of  comparing  farm  and  city  incomes.     Illustrate.    What 

are  the  chief  advantages  of  city  life,  not  represented  by  money  cost? 

11.  Is  the  farmer's  income  too  low?    Indicate  the  kind  of  "income"  you  are 

discussing. 

12.  Cite  the  conclusions  of  Dean  Kennedy. 

13.  Quote  from  letter  of  Washington  to  Arthur  Young. 

*  Kennedy,  Joseph.    Rural  Life  and  the  Rural  School,  Ch.  15. 


REFERENCES  95 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  In  calculating  the  farmer's  income  give  reasons  for  and  against  allowing 

interest  on  his  investment;  for  and  against  allowing  income  for  house 
rent  and  garden  produce. 

2.  As  used  in  agriculture  what  is  included  in  the  term  "capital"? 

3.  What  conclusions  are  we  justified  in  reaching  concerning  the  relative 

income  of  farmers  and  city  dwellers? 

REFERENCES 

1.  Funk,  W.  C:  "What  the  Farm  Contributes  Directly  to  the  Farmer's 
Living."    Farmers'  Bulletin  635,  United  States  Department  of  Agriculture. 

2.  GoLDENWEiSER,  E.  A.:  "The  Farmer's  Income."  Farmers'  Bulletin 
746,  United  States  Department  of  Agriculture. 

3.  VoGT,  Paul  L.:  "The  Farmer's  Labor  Income."  American  Economic 
Review,  Dec,  1916. 

4.  Warren,  G.  F.,  and  Livermore,  K.  C:  "An  Agricultural  Survey, 
Township  of  Ithaca,  Dryden,  Danby,  and  Lansing,  Tompkins  County,  New 
York."    Bulletin  295,  College  of  Agriculture,  Cornell  University,  March,  1911. 

5.  Von  Tungeln,  George  H. :  "A  Rural  Social  Survey  of  Orange  Town- 
ship, Blackhawk  County,  Iowa."  Bulletin  184,  Iowa  Agricultural  Experiment 
Station,  Dec,  1918. 

6.  Kennedy,  Joseph:    "Rural  Life  and  the  Rural  School." 


CHAPTER  VII 

AGRICULTURAL  LABOR 

Several  Aspects  of  the  Farm  Labor  Question. — Reference  is  fre- 
quently made  to  the  problem,  so  called,  of  farm  labor.  Is  there  such 
a  problem,  and  if  so  what  is  it?  A  very  brief  investigation  convinces 
anyone  that  there  is  such  a  problem.  It  is  illustrated  by  the  report 
made  in  1913  by  our  Consul  at  Leeds,  England,  on  the  "English 
Farm  Labor  Problem."   In  this  report  our  Consul  speaks  as  follows : . 

"The  northern  counties  of  England  are  experiencing  an  inconvenient 
condition  caused  by  a  dearth  of  farm  labor.  General  opinion  voiced  by  mem- 
bers of  chambers  of  agriculture  indicates  that  it  is  realized  that  farm  servants 
do  not  get  sufficient  relaxation;  cottage  accommodation  is  often  poor,  and  there 
is  little  incentive  generally  for  a  man  to  settle  to  a  life's  work  of  labor  on  the 
farm.  Some  say  that  most  farmers  would  be  quite  agreeable  to  granting,  at 
convenient  seasons,  sufficient  relaxation  to  their  servants  to  make  up  for  any 
compulsory  half  holiday  such  as  most  other  industries  enjoy.  Others  think 
that  the  possibihty  of  one  pound  ($4.87)  a  week  as  wages  and  cottage  would 
keep  men  from  moving  into  the  town. 

"Big  batches  of  farm  laborers  are  emigrating;  often  20  to  30  together. 
In  many  cases  Canada  or  Austraha  is  the  destination. 

"Agitation  is  afoot  to  form  a  Farm  Workers'  Union.  Meetings  of  farm 
laborers  have  been  addressed  by  officials  of  the  Workers'  Union  for  enrolling  suf- 
ficient men  and  women  to  warrant  forming  branches.    A  press  statement  says: 

"  'The  aim  of  the  Workers'  Union,  or  the  agricultural  section  of  it,  as  set 
out  in  the  literature  disseminated  is  to  secure  a  working  week  of  not  more  than 
60  hours,  payment  for  overtime  work,  and  extra  pay  for  all  Sunday  labor; 
limitation  of  hours  for  all  women  workers;  fixing  of  a  minimum  wage  rate,  both 
for  piecework  and  day-work,  all  employees  to  know  at  the  time  of  hiring  the 
rates  they  will  have  to  work  at;  and  to  secure  the  freedom  of  laborers'  cottages.' 

"Comparisons  have  been  drawn  between  the  earnings  of  the  women  of 
agricultural  sections  of  the  county,  making  30  to  37  cents  per  day  at  some 
classes  of  work,  and  the  earnings  of  the  women  weavers  of  Lancashire,  who 
can  make  $6.70  per  week.  From  the  news  reports  it  appears  that  the  farm 
laborer  is  slow  to  respond  to  the  agitation.  All  his  characteristics  prepare 
one  for  that  attitude,  but  every  fresh  hiring  timo  is  showing  him  his  position 
of  vantage  for  making  terms. 

"  At  the  recent  Whitsuntide  hirings  higher  prices  had  to  be  paid  all  around 
for  farm  hands,  who  then  hire  out  for  a  six-months'  term.  The  next  term 
commences  Martinmas,  November  11.  The  following  are  some  of  the  hiring 
wages  paid  at  the  chief  centers;  board  and  lodging  in  addition: 


Place  and  Wages  for  Six  Months  ^ 

Best 
men 

Second 
men 

Boys  and 
youths 

Girls  and 
women 

Appleby.  W^estmoreland       

$83-$102 

78-  117 
80-   107 

$68-$80 

68-  83 
63-  78 

$46-$68 

24-  68 
29-  54 

$36-$66 

Cockermouth,  Cumberland  (wages  highest 

known) 

Thirsk,  Yorkshire 

24-  58 
41-  92 

1  Daily  Consular  and  Trade  Reports,  July  12,  1913,  p.  238. 
96 


SIMILAR  CONDITIONS  IN  UNITED  STATES  97 

This  report  indicates  the  several  aspects  of  the  farm  labor 
question.  There  was  published  at  London  in  1913  for  official  use 
by  the  Board  of  Agriculture  and  Fisheries  a  Report  on  Migration 
from  Rural  Districts  in  England  and  Wales.  This  report,  like  the 
consular  report  above  quoted,  indicates  the  situation  confronting 
England.  This  London  report  says  that  there  certainly  appears 
to  be  a  fairly  general  deficiency  of  skilled  farm  hands.  The  manual 
arts  of  agriculture  are  being  neglected  even  by  those  who  still  seek 
employment  on  the  land.  To  quote  the  words  of  the  report,  we 
have  the  following: 

"  The  low  wages  in  the  rural  districts  are  mentioned  as  a  cause  of  discon- 
tent, but  it  may  be  doubted  whether  this  in  itself  is  so  powerful  a  factor  as 
the  lack  of  opportunity,  and,  in  fact,  there  appears  no  evidence  that  emigration 
is  greatest  in  districts  where  wages  are  lowest.  More  than  once  in  these 
reports  it  is  observed  that  many  who  emigrate  would  prefer  to  stay  at  home 
if  they  could  see  a  reasonable  prospect  of  advancement  in  Ufe.  Better  educa- 
tion, and,  as  is  remarked  by  some,  a  kind  of  education  which  gives  a  distaste 
for  country  hfe,  is  referred  to;  while  the  desire  for  shorter  hours  of  work,  for 
free  Sundays  and  for  more  holidays  is  also  mentioned;  but  these  are  causes 
for  leaving  the  country  which  are  more  likely  to  lead  to  migration  to  the  town 
than  emigration  to  the  colonies.  The  lack  of  housing  accommodation  is 
frequently  mentioned  as  influencing  men  to  leave  the  villages.  It  appears 
paradoxical  that  complaint  should  be  made  at  the  same  time  of  dwindling 
population  and  insufficient  cottages,  but  there  can  be  no  doubt  that  the  ques- 
tion of  rural  housing  is  acute."  ^ 

Similar  Conditions  in  the  United  States. — These  reports  bring 
before  our  mind  conditions  in  England.  Similar  conditions  exist 
in  the  United  States.  The  chief  difference  is  that  with  us  the 
difficulties  are  more  sharply  accentuated.  A  great  many  reports 
and  a  great  many  books  have  been  printed  dealing  with  agricul- 
tural labor  in  the  United  States.  It  seems  to  me,  however,  that 
the  two  following  letters,  written  with  no  thought  of  publication, 
throw  considerable  light  on  the  question.  The  first  letter  is  from 
a  young  man  who  had  been  working  on  a  North  Dakota  farm  in 
the  summer  time.  The  second  letter  is  from  a  social  worker  in 
Chicago  and  goes  into  the  problem  of  taking  the  unemployed  man 
from  the  city  and  placing  him  on  the  farm.  The  letters  are  printed 
exactly  as  they  were  written. 

"  Doubtless  it  will  surprise  you  to  hear  from  me  in  this  town,  but  I  came 
up  here  last  night.  I  couldn't  stand  the  pressure  of  the  farm  any  longer. 
The  man  I  worked  for  was  a  fine  fellow,  but  Uke  all  North  Dakota  farmers  he 
had  no  respect  for  the  Sabbath.  We  worked  the  last  three  Sundays  and  had 
good  prospects  for  working  four  more,  and  I  did  not  like  that,  so  I  left. 

"Yesterday  was  the  first  time  I  had  a  bath  in  over  three  weeks.  Last 
Sunday  morning  after  breakfast  I  shaved  myself  before  I  went  to  work.    I 

2  Board  of  Agriculture  and  Fisheries.  Report  on  Migration  from  Rural 
Districts  in  England  and  Wales,  1913,  p.  3. 

7 


98  AGRICULTURAL  LABOR 

expected  him  (the  farmer)  to  say  something,  but  he  did  not.  If  he  had  I 
certainly  would  have  told  him  what  was  on  my  mind.  And  then  another 
thing  that  made  me  sore  was  that  they  served  beer  at  the  table. 

When  we  started  harvesting  we  got  up  at  four  bells  and  worked  in  the  field 
until  eight.  Then  I  had  ten  horses  to  care  for  so  I  never  got  to  bed  before 
ten  P.M.    I  was  about  all  in. 

"I  am  undecided  just  what  to  do,  but  think  I  will  come  to  MinneapoUs 
and  get  work. 

Sincerely,"  etc. 

The  second  letter,  from  the  Chicago  social  worker,  follows: 

"Your  letter  indicates  that  you  do  not  fully  understand  the  situation 
with  unemployed  men.  How  are  these  men  to  reach  Minnesota?  Will  you 
send  the  railroad  fare  for  ten  men  and  take  your  chances  as  to  whether  the 
ten  are  good  men,  and  as  to  whether  they  will  stay  after  they  reach  you?  Do 
you  realize  that  more  than  two-thirds  of  these  men  have  never  worked  on 
the  farm^  and  that  if  you  and  your  friends  found  them  to  be  incompetent  you 
would  dismiss  them?  Usually  when  they  are  dismissed  they  are  without 
money  for  railroad  fare  to  return  to  the  city.  These  men  are  laboring  men, 
mechanics  and  their  helpers,  in  so  far  as  they  work.  Hundreds  of  them  are 
only  temporarily  out  of  work,  and,  for  a  variety  of  causes,  have  no  money. 
Not  many  of  them  are  too  lazy  to  work.  A  large  number  of  them  are  inca- 
pacitated by  drink  and  other  bad  habits. 

"  If  you  will  send  me  the  money  for  the  railroad  fare  and  take  your  chances 
on  these  men,  I  will  send  you  twenty  men,  or  more.  We  will  buy  the  tickets 
ourselves  and  take  the  men  to  the  train. 

"  I  know  you  will  treat  your  men  kindly,  but  I  know,  also,  from  personal 
knowledge,  that  some  farmers  compel  them  to  sleep  in  the  attic,  or  in  the  barn, 
give  them  poor  food,  and  work  them,  without  any  privilege  of  going  to  the 
town,  or  seeing  anything  but  the  farm.  These  men  are  human  and  they  want 
to  see  other  men  have  some  amusements,  and  be  treated  with  some  respect. 
Hundreds  of  farmers  show  them  positively  no  consideration  and  give  them  the 
same  care  that  they  do  their  mules.  If  the  farmer  does  not  like  them,  he  dis- 
charges them  at  once,  but  he  grumbles  if  they  leave  him  because  they  do  not 
Uke  him. 

"I  can  pick  out  a  number  of  men  that  I  think  will  work,  but  I  have  often 
been  mistaken,  and  may  be  again.    Yours  very  cordially,"  etc. 

Seasonal  Nature  of  Work. — Let  us  now  direct  our  attention  to 
some  of  the  details  of  the  problem  of  agricultural  labor.  The  first 
and  one  of  the  most  important  aspects  of  the  problem  is  the  seasonal 
nature  of  farm  work.  Farm  crops  are  planted,  cultivated,  and 
harvested,  as  a  rule,  in  the  summer-time.  The  winter  is  the  dull 
season  on  the  farm.  Therefore,  a  very  large  part  of  the  labor 
which  is  necessary  in  the  summer-time  cannot  find  employment 
on  the  farm  in  the  winter-time.  That  gives  us  the  pathology  of  a 
floating  population.  This  evil  is  greatly  aggravated  in  sections 
devoted  largely  to  one  crop  such  as  the  wheat  sections  of  the  North- 
west and  of  the  Middle  West.  Take  for  example  the  State  of  North 
Dakota.  In  the  winter  season  men  find  employment  in  the  woods 
as  lumber-jacks.  With  the  approach  of  spring  logging  operations 
in  the  woods  largely  cease.    These  men  drift  into  the  harvest  fields 


RECORDS  OF  CRIME  99 

in  the  summer-time.  When  the  harvest  and  threshing  season  is 
over  these  men  drift  back  along  the  main  routes  of  travel  into  the 
woods  and  into  the  cities  to  the  east  of  them.  This  makes  an  army 
of  laborers  numbering  many  thousands  of  men.  They  congregate 
in  the  villages  and  small  cities.  With  this  army  of  laborers  goes  a 
smaller  army  of  criminals  preying  on  the  larger  group.  In  the 
northwest  in  October  and  November  police  officials  always  expect 
and  prepare  for  a  wave  of  crime.  Desperadoes  who  follow  the 
army  of  workers  returning  with  wages  on  their  person  do  not  stop 
at  violence  and  even  murder. 

Records  of  Crime. — The  daily  press  of  this  section  at  this  season 
is  full  of  accounts  of  the  misdeeds  which  are  a  by-product  of  this 
floating  labor  population.  As  a  sample  let  us  take  one  issue  of  a 
northwestern  paper  published  at  a  point  on  one  of  the  main  routes 
of  travel  between  the  farms  and  the  woods  where  the  wagon  roads 
and  railroads  cross  the  Red  River  of  the  North.  Taking  the  issue 
of  the  Grand  Forks  Herald  for  October  12,  1915,  which  may  be 
considered  typical,  we  find  accounts  like  the  following.  The  first 
news  item  on  the  first  page  is  dated  Carrington,  North  Dakota, 
a  railroad  junction: 

"With  armed  posses  still  scouring  the  country-side  for  the  two  bandits 
who  escaped  after  one  of  their  comrades  had  been  killed  in  a  desperate  gun 
fight,  and  another  captured,  the  fugitives  were  still  at  large  at  a  late  hour 
tonight.  The  condition  of  Carl  Nelson,  chief  of  poHce,  who  was  shot  in  the 
stomach  during  the  battle,  which  took  place  in  the  Gilby  rooming  house  shortly 
after  2  o'clock  Sunday  morning,  was  reported  no  worse  to-night  at  the  St. 
Paul  hospital,  where  he  was  rushed  on  a  special  train  following  the  shooting, 
and  it  is  beheved  that  he  has  a  chance  for  recovery.  The  battle  was  the  cul- 
mination of  a  bold  holdup  Saturday  night  when  the  four  outlaws  hned  up 
seven  men  in  the  J.  Hopkins  pool  hall  here  and  reUeved  them  of  approxi- 
mately $250." 

Another  headline  reads  as  follows: 
"Man  is  held  up  at  the  point  of  a  gun." 
This  dispatch  is  sent  from  the  village  of  Hamilton,  N.  D. 

Another  dispatch  bears  the  headline: 

"Wanted  to  carve  up  a  threshing  crew.  On  rainy  days  men  receive  a 
shipment  of  booze  with  bad  results." 

This  dispatch  is  dated  Velva,  N.  D. 

Another  dispatch  from  Velva  reads  as  follows: 

"County  jail  is  filled  to  Umit.    Officers  have  been  very  busy  in  Towner." 

Another  dispatch  illustrates  how  the  transportation  difficulties 
are  sometimes  involved.    The  headline  reads  as  follows: 

"  Conductor  and  men  have  a  long  fight  with  hoboes.    Shoot  at  brakeman." 


100  AGRICULTURAL  LABOR 

In  this  connection  it  may  be  stated  that  it  sometimes  happens 
that  the  returning  harvest  hands  capture  a  freight  train  and  force 
the  train  crew  to  carry  them  without  compensation.  Indeed  it 
seems  to  be  a  common  practice  with  the  returning  laborers  not 
to  pay  carfare.  They  prefer  to  steal  a  ride  in  empty  freight  cars. 
This  in  turn  gives  the  robbers  a  better  chance  to  ply  their  nefarious 
trade.  This  illustrates  the  situation  as  it  is  in  the  fall  of  the  year. 
A  situation  very  much  similar  to  this  exists  in  the  spring  when  the 
men  are  drifting  westward  to  the  farms.  It  seems  fair,  therefore, 
to  consider  the  seasonal  nature  of  farm  work  as  one  of  the  most 
serious  problems  which  those  concerned  in  agriculture  are  called 
on  to  solve. 

I.  W.  W*s. — The  Industrial  Workers  of  the  World,  first  organ- 
ized as  an  industrial  union,  began  to  have  significance  for  farmers 
shortly  after  the  year  1910.  This  group  remains,  as  these  lines 
are  written,  as  one  of  the  unsolved  problems  in  the  farmer's  labor 
situation.  The  States  of  the  Northwest  find  their  peaceful  workers 
and  often  their  civil  authorities  in  collision  with  wandering  bands 
or  members  of  this  organization.  Repressive  measures  fail  to 
repress  them.  They  must  be  viewed  as  symptoms  of  some  under- 
lying unrest.  Yet  legislative  and  administrative  measures  dealing 
with  them  aim  at  their  ''suppression,"  but  do  not  touch  any  of 
the  causes  which  produce  them. 

The  spirit  of  the  farmer  towards  the  I.  W.  W.  is  expressed  in 
the  following  resolutions  adopted  at  the  tenth  annual  convention 
of  the  Farmers'  Cooperative  Association  of  South  Dakota,  held 
at  Sioux  Falls  in  December,  1916: 

"Whereas,  there  is  in  existence  an  organization  known  as  the  I.  W.  W., 
consisting  in  many  instances  of  a  lot  of  worthless  men  who  go  about  the 
country  intimidating  its  citizens  and  preventing  honest  labor  from  coming 
into  our  State,  and 

"Whereas,  the  farmers  of  South  Dakota  are  depending  at  different  times 
of  the  year  upon  what  is  known  as  transient  labor,  therefore,  we  recommend 
the  passage  of  some  law  that  will  rid  the  State  of  this  band  of  lawless  and 
ruthless  fellows." 

The  I.  W.  W.  members,  on  their  part,  demand  larger  pay  and 
shorter  hours,  as  a  general  rule.  Refusal  to  meet  their  demands 
leads  to  strikes,  sabotage,  and  various  forms  of  destruction  to 
property  and  life. 

Wages  of  Farm  Labor. — It  is  a  matter  of  common  observation 
that  wages  of  farm  hands  have  been  increasing  for  many  years  past. 
By  referring  to  statistical  publications  we  find  this  increase  has 
been  fairly  constant  for  at  least  150  years.    For  instance,  in  Massa- 


THE  DECLINE  OP  WOMli^N'S  WORE  SINCE  1871 


101 


chusetts,  a  farm  laborer  was  paid  for  a  day's  work  without  board 
in  1752,  thirty-three  cents;  by  the  time  of  the  Revolutionary  War, 
he  was  receiving  forty  cents.  The  Federal  government  has  made 
nineteen  investigations  of  wages  of  farm  labor.  In  the  year  1912 
the  report  of  the  Federal  government  on  this  subject  makes  this 
statement  concerning  day  wages: 

"For  day  labor  other  than  harvest  work,  with  board,  the  rate  in  1866 
was  sixty-four  cents  in  the  United  States.  It  reached  sixty-eight  cents  in 
1874  or  1875,  and  dechned  during  the  industrial  depression  of  the  'seventies, 
so  that  the  subsequent  increase  reached  seventy  cents  in  1881  or  1882.  From 
that  year  to  1898  the  rate  of  day  wages  for  labor  other  than  harvest  work 
with  board  remained  about  stationary  except  for  the  depression  of  the  'nineties. 
In  1898  the  rate  was  seventy-one  cents;  in  1899,  seventy-five  cents;  in  1902, 
eighty-three  cents;  in  1906,  one  dollar  and  three  cents;  and  in  1909,  the  same 
amount,  one  dollar  and  three  cents." 

This  shows  a  very  substantial  increase  in  wages  in  recent  years. 
This  increase  has  been  accompanied  with  an  increase  in  the  cost 
of  living.  However,  wages  had  risen  faster  than  the  cost  of  living 
up  to  the  time  of  the  World  War.  To  quote  further  from  the 
same  report : 

"These  comparisons  establish  the  conclusion  that  the  money  wage  rates 
of  farm  labor  have  increased  during  the  18  years  covered  in  a  considerably 
greater  degree  than  the  wages  of  working-men  in  non-agricultural  operations. 
In  the  purchasing  power  of  wages  in  terms  of  retail  prices  of  food  the  working 
men  barely  gained  from  the  first  period  to  the  second,  the  mean  index  number 
for  the  second  period  being  101.4.  For  the  farm  laborer  the  gain  was  from 
about  10  to  15  per  cent,  so  that,  notwithstanding  the  great  rate  of  increase  of 
retail  prices  of  food,  the  rates  of  wages  of  farm  labor  increased  in  degrees 
sufficient  to  make  as  a  net  result  a  substantial  rate  of  increase." 

The  Federal  government  published  the  following  table  com- 
paring the  years  1909  and  1915: 

Farm  Wages  Per  Year  Without  Board 


1909 

1915 

Per  cent 
increase 

United  States. . . 

329.16 
404.16 
241.56 
394.80 

262.20 
566.88 

361.80 
424.68 
257.64 

4  i  9.20 
454.80 
277.08 
579.72 

9  9 

5.07 

South  Atlantic 

6  65 

North  Central 

East  of  Mississippi 

7  22 

West  of  Mississippi 

6.22 

South  Central 

5.67 

Western 

2  27 

The  Decline  of  Women's  Work  Since  1871. — The  Federal  gov- 
ernment has  reported  on  the  subject  of  Supply  of  Farm  Labor. 

''The  outdoor  labor  of  women  on  farms  has  undergone  an  immense  reduc- 
tion within  a  generation  or  two.  In  1871,  the  department  of  agriculture 
investigated  the  subject  in  all  parts  of  the  country  and  these  results  were 
published  in  the  report  for  that  year.    At  that  time  reports  from  the  following 


102 


.AGRXCULTtJRAL  LABOR 


sections  are  typical,  indicating  clearly  the  reports  from  all  the  states.  In  New 
England  very  little  regular  labor  in  the  fields  is  performed  by  women.  Cana- 
dian women,  and  occasionally  Irish,  hire  out  or  work  on  shares  in  different 
parts  of  New  England,  though  the  number  employed  is  not  large,  and.  they 
wiU  undertake  nearly  all  kinds  of  farm  work.  Similar  customs  prevail  in 
New  York,  comparatively  httle  outdoor  service  being  rendered  by  American- 
born  women.  In  many  districts  in  Pennsylvania  very  Uttle  outdoor  employ- 
ment is  undertaken  by  women,  while  in  others,  especially  in  those  less  im- 
proved, or  with  a  large  foreign  element  in  the  population,  much  and  various 
farm  work  is  done  by  women.    Among  the  poorer  classes  of  whites  in  some 


Fig.  13. — Women  of  foreign  birth  doing  farm  work. 

counties  in  Maryland,  the  Germans  especially,  the  women  assist  in  such  labor 
as  planting,  hoeing  corn,  weeding  tobacco  and  raking  grain.  Sometimes  they 
obtain  men's  wages,  but  usually  about  three-fourths  as  much.  In  such  work 
they  are  often  quite  as  efficient  as  men.  Negro  women  have  been  accustomed 
to  all  kinds  of  farm  labor,  though  generally  employed  in  the  lighter  branches. 
Throughout  the  Southern  States  a  large  portion  of  the  females  among  the 
negroes  were  accustomed  to  general  farm  labor,  most  of  whom  now  decline  it, 
appearing  to  regard  it  as  a  relic  of  slavery  and  not  'suited  to  ladies.'  It  is 
stated  of  some  States  that  not  more  than  a  fourth  part  as  many  do  outdoor 
work  as  formerly.  Very  little  farm  work  is  done  by  native  Americans  in  all 
the  States  of  the  Ohio  Valley  and  the  Lakes,  that  Httle  being  casual  assistance 
in  emergencies,  as  a  matter  of  convenience  and  sometimes  of  necessity,  as  is 
reported  of  all  other  sections  of  the  country.  Gardening  and  fruit  picking 
are  preferred,  and  hop  picking,  where  hops  are  grown.  Immigrants  do  more 
outdoor  work,  'expecially  for  a  few  years  after  coming  here.  As  they  become 
Americanized  they  work  less  on  the  farm'"  (Fig.  13). 


WOMEN  AND  WAR  WORK  103 

At  the  present  time  about  one  agricultural  laborer  in  seven 
is  a  woman.  Her  work  has  been  reduced  largely  to  domestic 
affairs,  and  even  in  domestic  affairs  there  seems  to  be  a  reduction 
of  work  in  the  manufacture  of  food,  clothing,  and  supplies.  Con- 
tinuing the  same  report  to  which  we  have  alluded,  we  have  the 
following  interesting  situation: 

"With  regard  to  very  recent  years  census  statistics  of  female  agricultural 
labor  afford  no  satisfactory  conclusions.  A  general  knowledge  of  farming 
conditions  throughout  the  country,  past  and  present,  is  more  definite.  The 
outdoor  work  of  white  women  on  the  farms  of  medium  and  better  sort  has 
very  greatly  declined  from  early  days,  and  the  dechne  was  more  especially 
marked  after  the  Civil  War.  Farmers'  wives  and  daughters  no  longer  milk 
the  cows  and  work  in  the  field  and  care  for  the  Hvestock.  They  do  not  work 
in  the  garden  as  much  as  before,  nor  assist  so  much  in  fruit  and  berry  harvest ; 
they  are  making  less  butter,  and  cheese  making  on  the  farm  has  become  a 
lost  art.  They  may  care  for  the  poultry  and  the  bees,  do  housework  and 
gather  vegetables  for  the  table,  and  cook  and  keep  the  dwelling  in  order. 
Their  domestic  work  is  substantially  the  limit  of  their  work  on  the  farm. 

"  Decline  of  Household  Labor. — In  farm  household  matters  the  situation 
is  acute  with  regard  to  the  supply  of  hired  labor.  Country  girls  as  well  as 
city  girls,  no  matter  how  humble  their  lot  in  life,  regard  household  labor  for 
hire  as  unrespectable.  Joined  with  this  fact  is  the  other  one  that  the  women 
of  the  farmer's  family  are  neither  able  nor  wilHng  to  repeat  the  manual 
labor  performance  of  their  grandmothers  on  the  farm.  Besides  this,  the 
farmer's  standard  of  hving  has  risen,  certainly  on  the  medium  and  better  sort 
of  farms  in  the  North  and  West;  and  in  a  perceptible  degree  the  women  of  the 
farmer's  family  have  engaged  in  social  functions  which  are  beginning  to  be 
incompatible  with  the  performance  of  household  labor  without  the  aid  of  a 
servant.  The  social  obligations  undertaken  by  them  are  for  the  Grange,  the 
woman's  clubs,  the  Maccabees,  the  Women's  Christian  Temperance  Union, 
the  local  church,  the  farmers'  clubs,  a  fist  that  might  be  much  extended. 

"  Domestic  Industries. — ^The  old-time  domestic  industries  are  all  but 
forgotten.  The  women  of  the  farm  make  no  more  soap,  candles,  or  lye,  and 
so  on  with  a  long  fist  of  the  domestic  products  of  former  days;  it  is  rare  that 
one  of  the  younger  of  the  women  knows  how  to  knit.  Throughout  large  areas 
the  pride  of  the  housewife  in  great  stores  of  preserved,  dried,  and  pickled  fruits, 
berries,  and  vegetables  exists  chiefly  in  history,  and  dependence  is  placed  mostly 
upon  the  local  store  for  the  products  of  the  cannery  and  the  evaporator. 

Women  and  War  Work. — The  World  War  brought  tremendous 
social  readjustments  in  all  fields,  one  phase  being  the  employment 
of  women  for  outdoor  work  on  farms.  The  Woman^s  Land  Army, 
so  called,  rendered  a  very  distinct  service.  But  how  permanent 
this  participation  of  women  in  farm  work  will  be  it  is  impossible 
to  forecast. 

The  social  and  labor  needs  of  farm  women  have  been  studied  by 
the  Federal  Department  of  Agriculture.  ''Where  the  farm  woman 
is  the  mother  of  three  children  or  more,"  writes  a  Massachusetts 
farm  woman,  "she  should  have  an  aid,  and  thus  be  allowed  to  give  a 
large  part  of  her  attention  to  her  work  as  mother,  at  least  until  the 
children  are  of  age  to  help.    A  '  hired  woman '  is  as  essential  as  a 


104  AGRICULTURAL  LABOR 

'hired  man/  where  there  are  several  small  children.    This  does  not 
seem  to  have  occurred  to  either  the  farmers  or  their  organizations." 

Number  and  Supply. — In  1910  we  had  six  million,  four  hundred 
thousand  farmers  (including  2,350,000  tenants).  These  farmers 
employed  3,000,000  transient  laborers  during  the  year.  Adding 
this  number  to  the  number  of  tenants  and  owners  who  move 
every  year,  we  have  a  total  of  5,000,000  persons  who  are  more  or 
less  transient.  Laborers  who  seek  employment  for  the  entire 
season  are  generally  sons  of  farmers.  For  the  seasonal  demand 
of  the  harvest,  however,  the  country  must  call  on  the  city  for 
labor  as  it  does  for  money  to  move  the  crops.  But  the  shipment 
of  currency  from  the  city  bank  to  the  country  banks  is  now 
reduced  to  a  system  simple  and  adequate.  But  the  labor  question 
is  still  far  from  solution.  Only  a  few  of  the  more  important 
proposed  or  attempted  solutions  can  be  discussed  here. 

Private  Emplojnnent  Agencies. — These  agencies  operate  in  the 
larger  cities,  and  undertake  to  supply  unskilled  labor  for  any  and  all 
kinds  of  jobs.  To  a  small  extent  they  furnish  agricultural  laborers. 
The  farmer  applying  here  for  help  must  take  his  chances — a  big 
risk — of  getting  what  he  wants  or  needs.  Thus  a  Bohemian  farmer, 
living  in  a  Bohemian  colony  in  North  Dakota,  applied  at  a  Chicago 
agency  for  two  ''hands,"  stipulating  that  they  must  be  Bohemians. 
Two  Austrians  were  sent.  They  were  released  after  one  week's 
work.  Often  the  men  sent  quit  the  job  at  once  and  seek  for  other 
employment,  or  for  transportation  to  new  fields.  Indeed,  some  of 
them  seem  endowed  with  a  tourist-instinct. 

The  Unorganized  Movement. — The  harvest  season  brings  a 
so-called  "army"  of  laborers,  each  worker  following  his  own  lead. 
This  "mob,"  arriving  thus  in  hit-or-miss  fashion,  may  greatly 
oversupply  or  undersupply  the  farmers'  demands.  When  the 
supply  is  large,  farmers  of  course  select  the  best  and  get  them  at  a 
"fair"  wage.  On  the  other  hand  if  the  supply  is  a  httle  scarce, 
and  the  crops  are  ripening  fast,  the  laborers  become  very  severe 
and  lofty  in  their  demands.  They  congregate  in  the  railroad  village 
and  wait  for  the  farmer-bidders  to  come  in,  with  rigs  to  haul  them 
to  the  fields.  They  may  even  assume  an  arrogant  tone,  and  ask 
the  farmer  "to  bring  in  his  farm"  and  let  them  have  a  look  at  it 
before  accepting  employment.  During  the  pressure  of  the  harvest 
and  threshing  seasons,  these  casual  laborers  may  sometimes 
demand  an  increase  from  the  ordinary  two-dollar-a-day  wage 
(prevailing  before  the  World  War)  to  a  wage  of  five  or  even  ten 
dollars  a  day. 


IRREGULAR  EMPLOYMENT  105 

National  Farm  Labor  Exchange. — The  National  Farm  Labor 
Exchange  was  organized  at  Omaha  in  1915.  Its  second  annual 
convention  was  held  at  Kansas  City  in  1916.  It  is  the  plan  of  this 
National  Exchange  to  ascertain  through  the  means  of  sub-agencies 
the  needs  of  the  harvest  fields  of  the  several  States,  from  Oklahoma 
to  North  Dakota,  in  their  order  as  grain  ripens.  Next,  it  plans 
to  direct  the  laborers  to  the  place  where  they  are  needed,  and 
to  inform  them  as  to  the  conditions  and  nature  of  their  employ- 
ment. It  is  believed  that  through  this  method  it  will  serve  the 
unemployed  advantageously. 

Federal  Government  and  Farm  Labor. — The  United  States  has 
adopted  the  policy  of  directing  laborer  to  employer,  and  employer 
to  laborer.  This  is  done  by  means  of  Employment  Bureaus  estab- 
lished in  cities  and  towns  throughout  the  country.  Such  a  vast 
administrative  scheme  will  need  careful  attention  to  save  it  from 
the  usual  bureaucratic  extravagance.  There  is  danger  of  a  maxi- 
mum of  outlay  and  a  minimum  of  results. 

The  County  Farm  Bureau. — The  counties  that  are  enjoying  the 
services  of  a  county  Farm  Bureau  and  a  county  agricultural  agent 
are  conducting  employment  bureaus  for  farm  laborers.  Since  these 
county  bureaus  are  in  direct  contact  with  the  farm  labor  problem, 
their  services  bring  the  maximimi  of  result  with  the  minimum 
of  outlay. 

Mr.  H.  J.  Hughes,  former  editor  of  the  Farm,  Stock  and  Home, 
diagnosed  the  need  of  the  State  as  comprising  a  state-wide  clearing 
house  of  labor,  functioning  and  cooperating  with  the  farmers' 
clubs,  the  commercial  club  of  the  village  or  city,  and  the  railroads. 
And  five  conditions,  says  Hughes,  are  essential  to  the  satisfaction 
of  the  hired  man,  namely:  (1)  good  food  and  regular  meals;  (2) 
good  sleeping  quarters;  (3)  not  over  nine  or  ten  hours  of  work  per 
day;  (4)  fair  wages;  (5)  steady  time  from  day  of  hiring  till  job  is 
done.    Yet  usually  not  more  than  two  of  these  conditions  are  met. 

Irregular  Emplojrment. — As  long  as  any  community  depends 
chiefly  on  one  or  two  or  three  staple  crops,  a  situation  is  created 
whereby  irregularity  of  employment  of  labor  is  inevitable.  ''Long 
hours,  small  pay,  and  irregular  employment  are  what  the  immi- 
grant can  expect  on  the  farm,"  says  Hourwich.^  Hence  the 
laborer's  preference  for  work  in  the  city.  In  consequence  of  limited 
demand  for  it,  says  the  Industrial  Commission  Report,^  ''agricul- 
tural labor  is  the  least  paid  of  all  great  groups  of  occupations,  even 

^  Hourwich.    Immigration  and  Labor,  p.  112. 
*  Report  of  Industrial  Commission,  vol.  X,  p.  xx. 


106  AGRICULTURAL  LABOR 

allowing  for  the  laborer's  garden  and  other  privileges."  Hourwich 
thinks  a  market  for  agricultural  labor  may  grow  up  in  the  future 
with  the  eventual  spread  of  intensive  agriculture.  But  now  even 
many  American  farmers  are  migrating  to  Western  Canada.  In 
1910  there  were  103,984  emigrants  from  the  United  States  to 
Canada.  Since  the  American  farmer  cannot  keep  his  own  sons  on 
the  farm,  there  is  certainly  not  demand  enough  there  to  attract 
laborers  from  the  city,  except  during  the  high  demand  and  high 
wages  of  harvest  seasons. 

Transportation  and  Distribution  Problem. — One  of  the  most 
sensible  remedial  measures  for  dealing  with  the  labor  supply 
problem  has  been  proposed  by  W.  R.  Porter,  Superintendent  of 
the  Demonstration  Farms  of  the  North  Dakota  Agricultural 
College.  In  his  opinion  the  United  States  should  find  the  same 
solution  that  Canada  has  found  in  securing  transient  labor  for 
her  great  western  harvests.  The  laborers  live  in  eastern  Canada — 
more  than  a  thousand  miles  from  the  grain  fields.  The  Canadian 
laws  strictly  forbid  the  '^ stealing  of  rides"  on  trains,  the  custom 
so  universal  in  the  United  States.  The  Canadian  railroads  run 
''excursion  trains"  from  the  East  to  Winnipeg  and  the  West, 
charging  ten  dollars  to  go  and  twenty-eight  dollars  to  return  at 
the  end  of  the  summer.  This  practice,  now  twenty  years  old, 
has  resulted  in  the  farmers  of  western  Canada  securing  an  abundant 
supply  of  labor  of  the  best  quality.  Many  thousands  of  these 
industrious  young  men,  who  went  west  to  see  the  country,  re- 
mained as  permanent  settlers.  In  the  United  States  this  class  of 
young  men  will  not  pay  the  regular  first  class  fare  to  go  to  the 
western  fields,  neither  will  they  "beat  their  way"  on  the  railroad 
trains.  Consequently  they  do  not  go  at  all.  A  solution  of  this 
transportation  problem,  in  conjunction  with  the  subsequent  dis- 
tribution of  the  worker,  would  go  a  long  way  towards  solving  the 
farmer's  labor  problem.  For  factory  work,  like  farm  work,  is  in 
many  cases  seasonal. 

Drift  to  the  City. — It  has  long  been  recognized  that  persons  of 
ability  and  capacity  for  leadership,  born  on  farms,  usually  move 
to  the  city.  Thus  during  the  hearings  before  the  Industrial 
Commission  in  1899,  the  question  was  asked  of  Le  Grand  Powers: 

"Is  it  not  true  that  the  bankers,  lawyers,  doctors,  the  leading 
men  in  all  pursuits,  in  every  city  in  the  United  States,  were  origin- 
ally farmers?" 

Mr.  Powers  answered,  "Yes,  very  largely  so."  It  is  now  a 
matter  of  common  observation  that  if  we  call  the  roll  of  the  mer- 


DRIFT  TO  THE  CITY  107 

chant  princes,  the  captains  of  industry,  the  railroad  magnates, 
the  coal  and  oil  barons  and  the  notables  in  the  various  lines  of 
human  endeavor,  a  large  percentage  of  them  were  once  country 
boys.  It  should  be  more  generally  recognized  that  many  and 
various  forms  of  farm  labor  have  now  been  transferred  to  the  city. 
What  is  now  the  division  of  labor  between  farm  and  factory  and 
what  was  it  formerly?  The  American  farm  of  the  first  half  of  the 
nineteenth  century  was  really  a  diversified  business  in  itself,  com- 
prising not  merely  the  production  of  the  raw  materials  of  food 
and  clothing  and  tillage  tools,  but  the  actual  manufacture  and 
preparation  of  foods,  shoes  and  clothing,  and  the  ruder  implements 
of  tillage. 

Wakefield,  in  1833,  describes  the  American  farmer  for  us  in 
these  words: 

"Free  Americans,  who  cultivate  the  soil,  follow  many  other  occupations. 
Some  portion  of  the  furniture  and  tools  which  they  use  is  commonly  made  by 
themselves.  They  frequently  build  their  own  houses  and  carry  to  market,  at 
whatever  distance,  the  produce  of  their  own  industry.  They  are  spinners 
and  weavers;  they  make  soap  and  candles,  as  well  as,  in  many  cases,  shoes 
and  clothes  for  their  own  use." 

But  now  where  are  their  shoes  and  clothes  made?  In  the  city. 
So  also  with  their  soap,  their  candles,  their  lumber,  their  furniture. 
And  transportation  by  steam  and  electricity  has  likewise  centered 
in  the  cities.  In  short,  farm  activities  have  largely  been  trans- 
ferred to  the  city.  There  are  now  800,000  persons  in  cities  engaged 
in  manufacturing  automobiles  and  tractors — most  of  which  ma- 
chines are  for  farmers.  It  is  no  wonder  then  that  the  industrial 
growth  of  the  United  States  has  taken  leaders  and  laborers  from 
the  farms  to  the  cities.  The  manufacturing  States  of  the  East 
were  the  first  to  show  a  decrease  in  rural  population.  Thus  in 
the  decade  ending  in  1890,  New  England  and  New  York  showed  a 
loss  in  rural  population.  In  1900  New  Jersey,  Delaware,  Ohio 
and  Kansas  showed  losses.  Out  of  the  ninety-nine  counties  in 
Iowa,  the  22  urban  counties  showed  gains,  while  the  77  rural 
counties  showed  a  loss.  The  great  farming  country  of  the  Middle 
West  now  shows  a  loss  in  rural  population.  Thus  in  1910  the 
following  losses  were  registered: 

Illinois 7.0   per  cent 

Indiana 9.5         " 

Iowa 12.1 

Kansas 0.5         " 

Michigan 0.8 

Missouri 8.0         " 

Ohio 5.3 

Wisconsin 0.7         *' 


108  AGRICULTURAL  LABOR 

More  remarkable  still  is  the  loss  shown  in  the  newer  agricultural 
States,  such  as  Oklahoma  and  North  Dakota.  Four  counties  in 
North  Dakota  showed  losses  in  rural  population,  ranging  from  4 
to  17  per  cent.  In  Oklahoma  eight  counties  showed  a  falling-off 
in  their  population,  ranging  from  2.9  per  cent  to  23.2  per  cent. 
Four  of  these  counties  lost  over  10  per  cent  apiece.  Seven  counties 
gained  less  than  five  per  cent  each.  Yet  all  the  cities  of  the  State, 
with  the  exception  of  one  increased  over '200  per  cent  in  population 
during  the  decade.  The  contrast  in  the  growth  of  rural  and  urban 
population  is  seen  in  this  table : 

Increase  in  Population,  Oklahoma,  1900-1910 

Cities  of  25,(XrO  inhabitants  or  more  in  1910 526.1  per  cent 

Cities  of  2,500  to  25,000  in  1910 • 208.2 

Rural  Territory 41.4        " 

The  better  market  for  labor  in  the  city  causes,  in  large  part,  this 
emigration  from  the  country  to  the  city.  And  it  is  a  loss  to  the 
country  of  native  Americans  of  American  stock. 

Labor-saving  Machinery. — Le  Grand  Powers,  testifying  before 
the  Industrial  Commission,  expressed  his  belief  that  machinery  is 
displacing  labor  on  the  farm.  But,  he  continued,  the  effect  is  to 
elevate  labor.  ''Speaking  of  the  effect  of  improved  machinery  on 
labor,"  said  Powers,  ''I  would  say  that  the  introduction  of  im- 
proved machinery,  in  my  opinion,  has  been  an  important  factor 
in  the  elevation  of  labor.  It  has  called,  first,  for  greater  intelligence 
on  the  part  of  the  workingmen  on  the  farm ;  it  has  stimulated  that, 
and  it  has  otherwise  improved  the  intellectual  status  of  the 
American  farmer." 

H.  W.  Quaintance  has  undertaken  to  estimate  how  much 
farm  labor  has  been  displaced  by  the  modern  ''labor-saving"  farm 
machinery.  He  tells  us  that  it  formerly  required  11  hours  of  man 
labor  to  cut  and  cure  a  ton  of  hay;  it  now  requires  13^  hours. 
The  quantity  of  labor  saved  by  machinery  in  producing  the  farm 
crops  of  the  last  decade  of  the  nineteenth  century,  as  compared 
with  hand  methods  in  use  fifty  years  earlier,  is  estimated  at 
450,000,000  days.  This  saving  would  represent  the  labor  of 
one  and  a  half  million  men  the  three  hundred  working  days  of 
the  year. 

The  writer,  as  a  boy  on  the  farm,  assisted  in  "butchering" 
the  winter's  meat.  What  a  slow,  heavy  and  laborious  process 
butchering  on  the  farm  was!  Now  in  the  great  packing  houses  of 
Chicago  or  Kansas  City  a  gang  of  150  men  butcher  105  cattle 
per  hour.    Since  this  and  other  branches  of  farm  work  have 


IMMIGRATION  AND  FARM  LABOR  109 

gone  to  the  city,  the  hired  man  has  gone  to  the  city  too,  in  ever 
increasing  numbers. 

H.  E.  Hoagland  has  described  the  movement  of  rural  popula- 
tion in  Illinois.^  According  to  this  author  the  poverty  of  rural 
social  life  has  not  been  the  cause  of  rural  depopulation,  since  the 
regions  with  a  decrease  in  population  are  not  found  to  be  the  ones 
where  the  farmer's  life  is  duller  or  more  monotonous  than  thos^ 
in  which  the  rural  population  has  increased.  The  exodus  from 
rural  communities  has  been  fully  as  active  since  the  introduction 
of  rural  free  delivery,  the  telephone,  and  better  roads  as  before. 
The  increased  use  of  machinery,  increase  in  the  relative  number 
of  horses,  and  in  saving  of  time  by  use  of  the  telephone  and  by 
improving  the  roads  have  done  much  towards  increasing  the  effi- 
ciency of  the  farmers,  so  that  it  takes  fewer  of  them  to  produce  a 
given  quantity. 

City  Labor  for  Farms. — The  question  was  put  to  Le  Grand 
Powers  concerning  placing  the  city  man  on  the  farm.  He  saw 
little  hope  of  success  here,  since  it  takes  time  to  learn  the  business 
of  farming. 

Immigration  and  Farm  Labor. — The  ''old"  immigration  from 
the  British  Isles  and  Northwest  Europe  settled  very  largely  on 
the  land.  The  ''new"  immigration  does  not  do  so.  "After  their 
arrival  in  the  United  States,"  says  the  Federal  government,  "these 
immigrants  (Italians,  Slavs,  Hungarians)  do  not  seek  employment 
in  agriculture,  partly  because  of  the  difficulties  in  the  way  of  secur- 
ing it,  but  mainly  because  of  the  higher  rates  of  wages  in  other 
industries.  In  transportation,  manufacturing,  mining,  and  in 
building,  the  demand  for  common  labor  has  been  very  great."  ^ 

Colonies  of  the  older  immigrants  are  so  common  in  all  parts 
of  the  United  States  as  to  excite  no  comment  whatever.  The 
English  speaking  immigrants — Irish,  Scotch,  English,  Canadian, 
are  soon  Americanized  and  absorbed.  Bohemians,  Germans,  and 
Scandinavians  in  rural  colonies  slowly  but  surely  become  Ameri- 
canized. According  to  Le  Grand  Powers,  the  Germans  seek  to 
maintain  their  language,  especially  when  they  are  settled  under 
semi-religious  auspices.  This  is  doubtless  true  of  the  others,  yet 
the  foreign  language  rarely  survives  a  second  generation. 

Professor  Cance  of  the  Massachusetts  Agricultural  College 
has  made  a  very  extensive  investigation  of  immigrant  rural  com- 
munities,  particularly  of  the  Americanization  and   assimilation 

5  Journal  of  Political  Economy.    Vol.  20,  pp.  913-927. 
'  Labor  Bulletin,  No.  72,  p.  406,  September,  1907. 


110  AGRICULTURAL  LABOR 

problem.    ''In  general,"  says  Cance,  "all  foreign  rural  communi- 
ties in  the  East,  particularly  Hebrew  farm  colonies,  where  not 
very  large  nor  closely  segregated,  manifest  a  lively  desire  to  speak 
and  read  English,  to  adopt  American  dress,  customs  and  methods 
of  farm  practice,  and  where  encouraged,  to  seek  naturalization 
as  quickly  as  possible.    There  is  no  question  that  Americanization 
and  assimilation  take  place  more  rapidly  among  the  less  segre- 
gated rural  immigrants  than  in  congested  industrial  groups  in 
urban  localities.    Land  ownership  confers  dignity,  imposes  financial 
and  social  responsibility,  stimulates  activity  in  civic  affairs,  and 
awakens  community  interest  and  personal  pride.    In  short,  so  far 
as  the  immigrant  is  concerned,  rural  life  in  most  instances  has  had 
a  most  salutary  effect.     It  has  frequently  taken  an  ignorant, 
abject,  unskilled  dependent  foreign  laborer  and  made  of  him  a 
shrewd,    self-respecting,    independent   farmer   and   citizen.      His 
returns  in  material  welfare  are  not  great,  but  he  lives  happily, 
comfortably  and  peaceably,  and  in  time,  accumulates  a  small 
property.    The  second  generation  of  these  south  European  immi- 
grants are  frequently  not  less  progressive  than  Americans."    But, 
says  Cance,  leadership  and  encouragement  are  needed,  and  some 
opportunity  for  land  ownership — an  opportunity,  however,  now 
fast  disappearing.     ''Between  the  Italian  cotton  tenants  of  the 
Mississippi  Delta  region,"  concludes  Cance,  "among  whom  are 
few  citizens,  numerous  illiterates,  few  children  in  school,  very 
meager  community  institutions  and  no  political  interest  and  their 
kinsmen  in  upland  Arkansas,  with  a  majority  of  naturalized  citi- 
zens, a  most  lively  participation  in  pubHc  matters,  exceptionally 
fine  educational  and  religious  institutions,  little  illiteracy,  and  a 
rapidly  rising  standard  of  comfort,  the  contrast  is  most  striking. 
The  social  superiority  of  the  upland  Arkansas  colony  is  due  largely 
to  efficient  leadership  and  individual  ownership  of  land.     Other 
instances  might  be  cited  to  demonstrate  the  very  significant  truth 
that  progress  is  much  more  rapid  and  satisfactory  where  there  is 
some  one  to  lend  a  friendly  hand  from  the  beginning."  ^ 

Life  of  Farm  Laborer. — "How  are  farm  laborers  cared  for 
generally?  What  privileges  or  helps  do  they  get  besides  their 
wages?"  This  question  was  put  to  Mr.  Powers  by  the  United 
States  Industrial  Commission.  "In  our  section,"  said  Mr.  Powers, 
"the  average  farm  hand  lives  with  the  family  of  the  employer,  in 
the  same  house,  boards  at  the  same  table,  and  is  one  of  them." 

^  A.  C.  Cance,  "Immigrant  Rural  Communities."  Annals,  March,  1912, 
pp.  79,  80. 


QUESTIONS  ON  THE  TEXT  111 

The  conclusions  reached  by  John  Lee  Coulter  on  this  subject  are 
substantially  the  same.  ''It  is  impracticable,"  says  Coulter,  "to 
furnish  a  separate  house  or  building  for  these  hired  laborers,  and, 
therefore,  the  common  thing  is  for  the  hired  laborers  to  be  assigned 
rooms  in  the  family  residence  or  sleeping  quarters  in  some  of  the 
stables  or  hay  barns.  At  the  same  time  it  is  very  customary  for 
the  hired  laborers  to  sit  at  the  table  for  meals  with  members  of  the 
family  unless  the  number  is  large  enough  to  warrant  setting  the 
table  twice.  Where  only  one  or  two  laborers  are  employed,  it  is 
almost  a  universal  practice  for  these  one  or  two  laborers  to  live 
in  the  homes  with  the  resident  farmers."  ^ 

QUESTIONS  ON  THE  TEXT 

1.  Is  it  correct  to  speak  of  an  "agricultural  labor  problem"? 

2.  What  concrete  aspects  of  the  farm  labor  problem  were  mentioned  by  the 

American  Consul  at  Leeds? 

3.  Cite  the  conclusions  of  Board  of  Agriculture  and  Fisheries  in  its  Report 

on  Migration  from  Rural  Districts.    What  factors,  other  than  low  wages, 
are  mentioned? 

4.  What  general  conditions  of  farm  labor  are  set  forth  in  the  two  American 

letters  quoted? 

5.  Show  the  meaning  and  significance  of  the  seasonal  nature  of  farm  work. 

Show  the  social  pathology  of  such  a  condition. 

6.  Show  the  relation  of  the  I.  W.  W.  movement  to  agriculture. 

7.  Discuss  wages  of  farm  labor  as  to  increases,  and  purchasing  power. 

8.  Discuss  in  detail  the  decline  of  women's  work  on  farms  since  1871. 

9.  Discuss  the  number  and  supply  of  farm  laborers. 

10.  Name  and  describe  the  various  employment  agencies  in  the  field :  private 

agencies;  national  farm  labor  exchange;  federal  agencies;  farm  bureaus. 

11.  Show  the  evils  of  an  unorganized  movement  of  seasonal  farm  labor  in 

"mobs." 

12.  Describe  and  comment  on  the  solution  offered  by  Mr.  Hugh  J.  Hughes, 

particularly  his  five  points  making  for  the  satisfaction  of  the  hired  man. 

13.  What  fundamental  conditions  Ue  back  of  irregular  employment  on  farms, 

and  what  effects  do  these  conditions  have  on  immigrants? 

14.  Show  the  place  of  transportation  and  distribution  in  solving  the  labor 

problem. 

15.  State  some  of  the  fundamental  factors  underlying  the  drift  to  the  cities, 

commenting  in  particular  on  leadership  in  cities,  and  the  division  of 
labor  between  city  and  farm  now  and  formerly. 

16.  Cite  statistics  showing  decreases  in  rural  population  and  increases  in 

urban  population. 

17.  Show  economic  and  social  significance  of  labor  saving  machinery  in  agri- 

culture.   Cite  findings  of  H.  W.  Quaintance. 

18.  What  is  the  outlook  for  using  city  labor  on  farms,  according  to  Le  Grand 

Powers? 

19.  Compare  the  "old"  and  the  "new"  immigration  as  to  farmers  and  farm 

laborers. 

8  John  Lee  Coulter,  Agricultural  Laborers  in  the  United  States,  Annals, 
March,  1912. 


112  AGRICULTURAL  LABOR 

20.  What  records  have  been  made  by  our  immigrant  farm  colonies?    Show 

the  economic,  social,  and  civic  significance  of  the  different  nationalities. 

21.  The  life  of  the  farm  laborer  has  what  social  advantages  and  disadvantages? 

22.  What  six  States  show  no  loss  in  rural  population  in  the  decade  1900-1910? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Formulate  a  plan  for  meeting  the  seasonal  requirements  of  agriculture  for 

labor.  Is  it  possible  to  coordinate  this  demand  with  the  city's  seasonal 
demand? 

2.  To  what  extent  should  we  endeavor  to  abolish  the  problem  of  seasonal 

demand  for  labor  by  diversification  of  crops  and  smaller  sized  farms? 

3.  Is  the  I.  W.  W.  movement  in  agriculture  a  cause  or  an  effect  of  pathological 

conditions  in  agriculture?  Discuss  this  movement  carefully,  both  as  a 
symptom  and  as  a  cause.  Suggest  remedies,  both  suppressive  and  con- 
structive. Criticise  the  position  taken  by  the  South  Dakota  farmers  on 
this  subject. 

4.  Show  to  what  extent  farm  labor  (in  the  old  sense)  is  now  being  done  in 

cities,  and  the  social  significance  of  this  condition.  {E.g.,  manufacture 
of  the  farmer's  food,  clothes,  implements,  suppHes,  etc.) 

5.  Why  should  three  New  England  States  show  no  loss  in  rural  population, 

1900-1910,  while  all  the  neighboring  States  showed  such  a  loss? 

6.  "The  farm  labor  problem  is  a  problem  of  transportation  and  distribution." 

Debate. 

7.  Complete  the  table  in  the  Appendix  of  this  chapter. 

REFERENCES 

1.  Coulter,  John  Lee:    "Agricultural  Laborers  in  the  United  States," 
Annals,  March,  1912. 

2.  Cance,  a.  C:  "Immigrant  Rural  Communities,"  Annals,  March,  1912, 

3.  HoAGLAND,  H.  E.:    "Journal  of  Pohtical  Economy,"  Vol.  20,  pp.  913- 
927. 

4.  HouRWiCH,  Isaac  A.:    "Immigration  and  Labor." 

5.  Labor  Bulletin  72,  United  States  Bureau  of  Labor  Statistics,  Sept.,  1907. 
G.  Report  of  the   United  States   Industrial  Commission,   Washington, 

1898-1902,  Vol.  X. 

7.  Board  of  Agriculture  and  Fisheries,  Report  on  Migration  from  Rural 
Districts  in  England  and  Wales.    London,  1913. 

8.  Daily  Consular  and  Trade  Reports,  Washington,  July  12,  1913,  p.  238. 

9.  New  York  State  Boys'  Working  Reserve  Circular  No.  1.     New  York 
State  Food  Commission,  Albany,  March,  1918. 

10.  Wilcox,  E.  V. :  "  Plan  of  the  Department  of  Agriculture  for  Handhng 
the  Farm  Labor  Problem."    Am.  Ec.  Review,  March,  1918,  158-171. 

11.  Barnes,  C.  B.:     "Employment  and  the  Labor  Market."    Am.  Ec. 
Review,  March,  1918,  171-177. 

12.  Seager,  H.  R.  :  "  Coordinating  Federal,  State  and  Municipal  Employ- 
ment Bureaus."    Am.  Ec.  Review,  March,  1918,  141-147. 

13.  Discussions  of  above  three  papers  by  App,  Willard,  Barnett,  BiUings, 
Wileman,  Lescohier,    Am.  Ec.  Review,  March,  1918,  177-194. 

14.  OsBORN,  Chas  F. :    "Methods  of  Meeting  the  Demand  for  Labor." 
Monthly  Review,  U.  S.  Bureau  of  Labor  Statistics,  Sept.,  1917. 

15.  Leiser^ion,  W.  M.:     "MobiHzing  and  Destributing  Farm  Labor  in 
Ohio."    Monthly  Review,  U.  S.  Biireau  Labor  Statistics,  April,  1918. 


REFERENCES  113 

16.  Agricultural  Wages  Board.  Report  of  the  Committee  Appointed  by 
the  Agricultural  Wages  Board  to  Enquire  into  the  Financial  Results  of  the 
Occupation  of  Agricultural  Land  and  the  Cost  of  Living  of  Rural  Workers^ 
London,  1919. 

17.  Wages  and  Conditions  of  Employment  in  Agriculture.  2  vols.  Vol.  I, 
General  Report;  Vol.  II,  Reports  of  Investigators,  London,  1919. 

18.  Stoddard,  C.  T.:  "How  the  United  States  Employment  Service  is 
MobiHzing  Workers."  Monthly  Review,  U.  S.  Bureau  Labor  Statistics, 
May,  1918. 

19.  Abstract  of  the  Report  on  Recent  Immigrants  in  Agriculture,  1-75. 
The  Immigration  Commission,  1911. 

20.  Hasbach,  W.:  "A  History  of  the  EngUsh  Agricultural  Laborer," 
London,  1908. 

21.  Savage,  W.:    ''Rural  Housing."    London,  1915. 

22.  Heath,  F.  G.:    "British  Rural  Life  and  Labor."    London,  1911. 

23.  Kebbel,  T.  E.:    "The  Agricultural  Laborer."    London,  1893. 

24.  Farm  Wages  in  North  Dakota  in  1919.  Commercial  West,  January 
3,  1920,  p.  49. 

25.  New  Agricultural  Laborer's  Code  in  Germany.  Labor  Gazette  (Can- 
ada), November  1919,  p.  1313. 

26.  Yearbook  Department  of  Agriculture,  1911.  Seasonal  Distribution 
of  Labor  on  Farms,  247-256. 

27.  Yearbook  Department  of  Agriculture,  1910.  Supply  and  Wages  of 
Farm  Labor,  189-201. 

28.  Yearbook  Department  of  Agriculture,  1918.  McCormick,  E.  B.: 
"Housing  the  Workers  on  the  Farm,"  347-357. 

29.  Industrial  Commission,  Vol.  X,  xxiii-xxiv,  cxlvi-chv,  xciii-xcvii;  Vol. 
XI,  73-144;  Vol.  XIX,  115-123. 

30.  Jenks  and  Lauck:  "Immigration  Problems."  See  chapter  on  Immi- 
grants in  agriculture. 

31.  Bailey,  L.  H.    (editor):      "Cyclopedia  of  American   Agriculture." 

32.  Putnam,  Bertha  H.:  "The  Enforcement  of  the  Statute  of  Laborers 
During  the  First  Decade  After  the  Black  Death"  (Columbia  University 
Studies,  1908,  Vol.  32). 

33.  Hammond:  "The  Village  Laborer,  1760-1832."  A  study  in  the  gov- 
ernment of  England  before  the  Reform  Bill,  1911. 

34.  International  Institute  of  Agriculture,  Rome.  International  Review 
of  Agricultural  Economics:  "Minimum  Wage  for  Agricultural  Labor  in 
England  and  Wales,"  Aug.,  Sept.,  Oct.,  1919,  543-564.  Holland— "  Wages 
of  Rural  Labor,"  Aug.,  Sept.,  Oct.,  1919,  564-568.  Great  Britain  and  Ireland, 
"Supply  and  Conditions  of  Agricultural  Labor,"  Nov.,  Dec,  1919,  660-677. 
Spain— "Labor  Exchange,"  Nov.,  Dec,  1919,  688-690.  Australia— "An 
Interesting  Award  Affecting  Labor  in  Sheep  Farming"  (same  pay  as  city  labor), 
March,  1918,  234-240.  United  States—"  The  Problem  of  Agricultural  Labor — 
Summary  of  Nine  Discussions."  June,  1918,  494-522.  Denmark — "Average 
Working  Hours  and  Wages  in  Agriculture  in  1915,"  Nov.,  Dec,  1918,  921-928. 
France— "The  Condition  of  Rural  Labor  in  France,"  1913-1914,  July,  1917, 
68-79.  California — "Improvements  of  Conditions  Among  Immigrants  into 
California,"  Dec,  1917,  66-74. 

35.  Wyckoff,  Walter  A.:  "The  Workers;  An  Experiment  in  Reality." 
IV,  A  Farm  Hand.  Scribner's,  Nov.,  1897,  549-560.  With  Iowa  Farmers, 
Scribner's,  May,  1901,  525-536. 

8 


114  AGRICULTURAL  LABOR 

APPENDIX 

Falling  off  in  Rural  Population  for  the  Decade  1900-1910  by  Per  Cents 
Table  showing  (1)  total  increase  in  population  of  each  State;  (2)  total  increase  in  urban 

population  for  each  State;  (3)  total  increase  or  decrease  in  rural  population  for  the  State 

as  a  whole;  (4)  decrease  in  rural  population  in  certain  counties.     Any  place  having  fewer 

than  2,500  inhabitants  is  called  "rural." 

This  table  shows  that  of  our  48  States,  only  6  show  no  decrease  in  rural  population  for 

the  decade.     These  6  States  are  Arizona,  Connecticut,  Idaho,  Massachusetts,  New  Mexico, 

Rhode  Island. 

Alabama State  increase 16.9  per  cent 

Urban  increase 55.9        " 

Rural  increase 11.1        " 

County  decreases  in  rural  population. 

Barbour 7.0 

Bullock 10.8 

Cherokee 4.1 

Colbert 0.3 

Dallas 13.5 

Greene 6.1 

Hale 10.1 

Lowndes 10.5 

Perry 1.8 

Russell 6.5 

Sumter 12.3 

Wilcox 5.1 

Arizona State  increase 66.2  per  cent 

Urban  increase 195.5        " 

Rural  increase 39.0        " 

County  decrease  in  rural  population,  none. 

Arkansas State  increase 20.0  per  cent 

Urban  increase 53.9        " 

Rural  increase 16.3        " 

County  decreases  in  rural  population : 

Boone 12.7 

Carroll 11.0 

Fulton 5.6 

Little  River 1.0 

Madison 19.2 

Marion 10.3 

Newton 15.4 

Ouachita 1.5 

Polk 11.2 

Sharp 4.2 

Washington 2.6 

(Note. — This  table  is  to  be  completed  by  the  student  by  adding  statistics  for  the  remaining 
45  States.     Also  construct  a  similar  table  for  the  decade,  1910-1920.) 


CHAPTER  VIII 

AGRICULTURAL  MACHINERY  AND  THE  TRUST  QUESTION 

Agricultural  labor,  as  we  have  seen,  is  scarce,  and  growing 
scarcer.  Keeping  pace  with  this  growing  scarcity  of  labor  is  an 
increase  in  labor-saving  machinery  on  the  farm.  Testifying  before 
the  Industrial  Commission  in  1900,  a  Georgia  planter  said  that 
now  one  man  and  "a,  McCormick  reaper  and  two  mules  do  the 
work  of  eight  good  men."  The  same  changed  condition  was 
pictured  by  M.  F.  Greeley  of  South  Dakota,  in  these  words: 
*' When  I  first  worked  out  it  took  five  binders  to  follow  a  machine, 
one  man  to  rake  off,  and  one  to  carry  the  bundles  together.  Now 
the  hired  girl  frequently  drives  a  machine  that  does  the  whole 
business."  Without  accepting  the  literal  truth  of  this  rhetorical 
statement  of  Mr.  Greeley's  we  can  safely  believe  the  basic  fact 
that  there  has  been  a  tremendous  increase  in  the  use  of  agricultural 
machinery  in  recent  years. 

Industrial  Revolution  in  Agriculture. — The  "Industrial  Revo- 
lution in  Agriculture"  has  come  about  one  hundred  years  behind 
the  revolution  in  the  manufacturing  industry.  Since  the  Civil 
War  we  have  witnessed  a  great  increase  in  the  use  of  farm 
machinery.  The  following  interesting  table  shows  the  change  in 
three  decades: 

Value  of  Agriculturol  Machinery  Per  Acre  of  Farm  Land 

1880 %  .76 

1890 79 

1900 89 

1910 1.44 

A  calculation  made  by  the  Department  of  Labor  in  1899 
showed  that  improved  agricultural  machinery  had  reduced  the 
labor  cost  of  corn  per  bushel  from  35.77  cents  to  10.57  cents,  or 
70.5  per  cent,  and  had  reduced  the  time  of  human  labor  from  274 
minutes  to  41.3  minutes,  or  84.9  per  cent.  David  A.  Wells  esti- 
mated that  the  labor  of  three  or  four  men  in  the  Dakota  wheat 
fields  would  annually  produce  1,000  barrels  of  flour,  delivered  at 
the  seaboard,  or  enough  flour  to  furnish  bread  to  one  thousand 
persons  for  one  year. 

Effects. — Investing  more  money  in  agricultural  machinery  has 
made  this  industry  more  ''capitalistic."  There  is  now  less  of 
drudgery  in  farming  and  more  of  business.  The  capital  invest- 
ment of  the  farmer  must  now  be  rightly  apportioned  to  each  of 

115 


116      AGRICULTURAL  MACHINERY  AND  TRUST  QUESTION 

the  four  factors,  such  as  land,  buildings,  machinery,  and  livestock. 
The  management  of  ''capital,"  therefore,  rather  than  the  manage- 
ment of. land,  becomes  the  uppermost  consideration,  and  in  that 
sense,  agriculture  becomes  ''capitalistic."  Among  the  beneficial 
effects  of  improved  machinery  are  two  very  important  ones, 
namely,  increased  yields  and  lessened  cost  of  production.  Crude 
implements  admitted  only  of  crude  tillage  (Fig.  14).  With  im- 
provements in  tillage  tools  came  increase  in  yields.  An  increase 
in  the  yield  of  the  products  of  the  farm,  without  an  increase  in 
the  demand  for  such  products,  would  of  course,  merely  result  in 


Fig.    14. 


-Evolution  of  the  reaper.    Cyrus  Hall  McCormick's  first  successful  reaper,  invented 
in  1831  and  patented  in  1834. 


lowering  their  price,  and  hence,  in  lowering  the  rent  of  the  land  or  in 
putting  the  poorer  grades  of  land  out  of  use  altogether.  It  is  of 
course  true  that  the  consumer's  demand  for  bread  and  meat 
may  increase  or  decrease  from  decade  to  decade.  Or  the  increase 
in  production  is  disposed  of  by  way  of  the  foreign  markets.  Thus 
our  great  staples — wheat,  meat,  and  cotton — feed  and  clothe  many 
people  in  many  foreign  lands.  These  products  in  turn  are  ex- 
changed in  part  for  food  products,  in  part  for  other  things.  But 
the  result  of  increased  production  at  home,  therefore,  is  seen  to 
be  an  increase  in  food  consumption,  but  food  of  many  varieties 
from  many  corners  of  the  world.  Tropical  fruits  that  were  once 
a  luxury  for  the  rich  are  now  a  commonplace  on  the  tables  of  the 
working  man. 


THE  PURCHASE  OF  FARM  MACHINERY  117 

The  Purchase  of  Farm  Machinery. — Since  the  industrial  revo- 
lution in  agriculture,  the  farmer  normally  buys  most  of  the  tillage 
tools  used  on  his  farm.  This  fact  is  best  appreciated  when  we 
contrast  the  situation  to-day  with  that  of  the  time  of  George 
Washington,  when  tillage  tools  and  household  supplies  were  made 
on  the  farm.  For  instance,  a  neighbor  of  Washington's  has  left 
us  this  description  of  the  work  done  on  a  farm  near  Mount  Vernon: 

"My  father  had  among  his  slaves  carpenters,  coopers,  sawyers,  black- 
smiths, tanners,  curriers,  shoemakers,  spinners,  weavers,  and  knitters.  His 
woods  furnished  timber  and  plank  for  the  carpenters  and  coopers,  and  char- 
coal for  the  blacksmith;  his  cattle  killed  for  his  own  consumption  and  for  sale, 
supphed  skins  for  the  tanners,  curriers,  and  shoemakers;  and  his  sheep  gave 
wool  and  his  fields  produced  cotton  and  flax  for  the  weavers  and  spinners, 
and  his  own  orchards  fruits  for  the  distillers.  His  carpenters  and  sawyers 
built  and  kept  in  repair  all  the  dweUing  houses,  barns,  stables,  ploughs,  bar- 
rows, gates,  etc.,  on  the  plantation,  and  the  outhouses  of  the  house  .  .  .  The 
blacksmiths  did  all  the  iron  work  required  by  the  establishment,  as  making 
and  repairing  ploughs,  barrows,  teeth,  chains,  bolts,  etc." 

As  described  elsewhere  in  this  book,  the  division  of  labor  be- 
tween town  and  country  has  taken  away  from  the  farm  most  of 
the  processes  of  manufacture.  This  has  given  rise,  at  frequent 
periods,  to  chafings  and  mutterings  of  discontent  on  the  part  of 
the  farmer,  particularly  as  to  the  quality  and  cost  of  the  imple- 
ments purchased  by  him,  and  the  high  cost  of  repairs.  As  described 
elsewhere,  the  "farmers,  through  the  National  Grange  actually  con- 
templated entering  upon  the  manufacture  on  a  large  scale  of  farm 
implements,  placing  the  factories  near  the  centers  of  farm  crop 
production.  This  scheme  however,  finally  fell  through.  The 
manufacture  of  most  forms  of  farm  machinery  has  therefore  come 
to  be  in  private  hands.  The  exception  to  this  rule  may  be  found 
in  those  States  where  prison  labor  is  used  for  making  certain  farm 
machinery.  The  sale  of  farm  implements  is  chiefly  in  the  hands 
of  private  dealers.  However,  the  purchase  of  farm  machinery 
collectively  by  organized  groups  of  farmers,  through  various  forms 
of  cooperative  associations,  is  gradually  increasing.  The  outlook 
is  very  favorable  for  the  use  here  of  cooperative  purchases  by  the 
combined  farmers  in  dealing  with  the  manufacturers  or  the  dis- 
tributors. Since  farmers  are  slower  to  form  combines  than  are 
manufacturers,  the  problem  which  has  for  some  years  confronted 
the  farmer  is  this,  namely :  What  is  the  correct  economic  policy 
for  the  scattered,  unorganized  farmers  to  adopt  towards  the  com- 
binations of  manufacturers  of  tillage  tools?  Shall  farmers  combine 
and  deal  with  the  combined  manufacturers  on  a  basis  of  equahty? 
Or  shall  farmers,  through  the  processes  of  the  courts,  seek  to  dis- 


118     AGRICULTURAL  MACHINERY  AND  TRUST  QUI^STION 

solve  the  combines  of  manufacturers?  Since  this  question  is  one 
of  fundamental  economic  and  social  significance,  it  is  here  con- 
sidered at  length.  And  furthermore,  farmers  are  now  combining  in 
large  groups,  and  wisely  so,  for  the  purpose  of  collective  activities, 
and  hence  this  question  has  more  than  academic  interest  for  them. 

The  "  Harvester  Trust." — Every  farmer  who  uses  tillage  tools 
is  interested  in  the  so-called  ''  harvester  trust."  No  large  industrial 
corporation  has  been  more  discussed  in  the  farm  press  than  the 
International  Harvester  Company.  But  a  small  part  of  this  dis- 
cussion has  shed  any  light  on  the  subject.  Yet  there  are  literally 
thousands  of  pages  of  sworn  testimony  available,  setting  forth  the 
history  and  methods  of  this  company  in  the  minutest  detail.  The 
history  of  this  company  has  wide  economic  and  social  impKcations. 

Its  History. — The  International  Harvester  Company  was 
organized  in  1902  as  a  consolidation  of  five  manufacturers  of 
harvesting  machines  in  the  United  States,  namely,  the  McCormick 
liarvesting  Machine  Co.,  Deering  Harvester  Co.,  Piano  Manu- 
facturing Co.,  the  Warder,  Bushnell  &  Glessner  Co.,  and  the 
Milwaukee  Harvester  Co.  The  companies  thus  consolidated  had 
in  1902  about  90  per  cent  of  the  total  production  of  grain  binders 
in  the  United  States  and  about  80*  per  cent  of  the  total  production 
of  mowers,  the  two  chief  kinds  of  harvesting  machines.  The  inter- 
ests included  in  the  combination  had  previously  'been  in  keen 
competition.  An  attempt  made  in  1890  to  establish  a  general 
consolidation  of  makers  of  harvesting  machines  was  a  failure,  and 
from  that  time  on  until  the  merger,  competition  was  severe,  result- 
ing in  costly  duplication  of  sales  agents  and  traveling  salesmen. 
After  its  organization,  the  International  Harvester  Company  at 
once  began  to  acquire  competing  makers  of  harvesting  machines. 
In  January,  1903,  it  acquired  control  of  D.  M.  Osborne  &  Co.,  its 
chief  competitor.  Ry  1904  control  had  been  secured  of  several 
other  concerns,  including  the  Minnie  Harvester  Co.,  the  Aultman- 
Miller  Co.,  and  the  Keystone  Com.pany.  From  manufacturing 
harvester  machines  the  company  pushed  on  into  new  lines.  Among 
the  most  important  of  such  lines  were  tillage  implements,  manure 
spreaders,  farm  wagons,  gasoline  engines,  tractors,  and  cream 
separators.  In  order  to  obtain  its  raw  materials  more  economically, 
efficiently  and  promptl}^,  and  to  save  the  margins  taken  by  useless 
middlemen,  the  company  entered  the  fields  of  raw  material  and 
transportation.  It  secured  control  of  ore  lands  in  Wisconsin, 
Minnesota,  and  Michigan,  coal  lands  and  coke  ovens  in  Kentucky; 
blast  furnaces  for  the  production  of  pig  iron,  steel  mills  and  rolling 


EXCLUSIVE  CONTRACT  119 

mills  at  South  Chicago;  timber  lands  in  Missouri  and  Mississippi; 
saw  mills  in  Arkansas  and  Missouri;  27.18  miles  of  trackage  of  the 
Illinois  Northern  Railway,  serving  the  McCormick  works;  24.75 
miles  of  trackage  of  the  Chicago,  West  Pullman  and  Southern 
Railroad  Company  which  serves  the  company's  steel  mills  and 
the  Piano  Works  at  West  Pullman.  In  1905  the  International 
Flax  &  Twine  Company  of  Minnesota  was  organized  as  a  subsidiary 
company  of  the  International  Harvester  Company,  for  the  purpose 
of  manufacturing  binder  twine  from  flax  straw,  so  as  to  substitute 
in  large  measure  fiber  from  American-grown  flax  straw  for  the 
sisal  and  manila  fibers  imported  from  Yucatan  and  the  Philippine 
Islands.  In  addition  to  the  foregoing  steps,  the  company  developed 
an  important  export  trade  in  harvesting  machinery.  Over  30,000 
local  dealers  handle  the  machinery  of  this  company  outside  the 
United  States.  Agencies  have  been  established  throughout  the 
various  countries  of  Europe,  in  Northern  and  Southern  Africa,  in 
South  and  Central  America,  and  in  Siberia.  For  instance,  the  branch 
house  at  Omsk,  Central  Siberia,  did  a  business  for  the  company 
in  the  year  1912  amounting  to  more  than  three  million  dollars. 

Investment  and  Capitalization. — The  extraordinary  overcapi- 
talization which  characterized  most  of  the  large  industrial  con- 
solidations formed  in  the  period  of  combines  (1898-1902)  was 
absent  in  the  case  of  the  International  Harvester  Company.  The 
original  capital  stock  was  $120,000,000.  The  cash  stock  of 
$60,000,000  appears  to  have  been  paid  up  in  full.  The  appraisal 
value  of  the  plants,  inventories,  etc.,  for  which  the  remaining 
$60,000,000  of  stock  was  issued  was  $67,000,000.  The  bankers 
and  promoters  received  $3,700,000  stock  for  their  expenses  and 
services.  In  1910  the  capital  stock  was  increased  to  $140,000,000, 
by  the  issue  of  a  common  stock  dividend  of  $20,000,000.  The 
purpose  of  the  merger,  according  to  the  company's  testimony, 
was  "to  reduce  operating  expenses  and  decrease  competition." 
The  federal  government,  reporting  on  this  company,  summarized 
its  conclusions  in  these  words:  ''It  appears  therefore,  that  the 
International  Harvester  Company's  position  in  the  industry  is 
chiefly  attributable  to  a  monopolistic  combination  in  the  harvesting 
machine  business,  certain  unfair  competitive  methods,  and  superior 
command  of  capital." 

Exclusive  Contract. — ^An  objectionable  competitive  method 
was  the  use  of  the  so-called  ''exclusive  contract,"  or  exclusive 
clause  in  agency  contracts.  This  practice  was  discontinued 
after  1905. 


120     AGRICULTURAL  MACHINERY  AND  TRUST  QUESTION 

Quality  and  Price. — In  the  ouster  suit  in  Missouri,  the  Supreme 
Court  of  that  State  spoke  on  the  subject  of  the  price  and  quahty 
of  binders  in  this  manner:  ''So  in  the  case  at  bar,  the  price  of 
harvesting  machines  has  not  increased  in  proportion  to  the  in- 
creased cost  of  construction  or  the  increased  merit  of  the  machines. '^ 
In  the  suit  before  the  Supreme  Court  of  Kansas,  the  State  referred 
the  case  to  a  Commissioner,  to  report  his  findings  of  fact,  and  his 
report  includes  the  following  statements  as  to  quahty  and  pi-ice: 
When  the  Harvester  Company  began  business  in  Kansas  in  the 
fall  of  1902,  certain  reductions  in  price  were  made  on  binders  and 
mowers.  No  increases  in  price  were  made  till  the  season  of  1908, 
and  then  an  increase  of  5  per  cent  was  made.  In  the  same  period 
the  prices  of  commodities  in  general  were  in  the  State  of  Kansas 
considerably  increased.  The  average  increase  in  the  costs  of  all 
raw  materials  for  producing  farm  machinery,  from  1902  to  1907, 
was  from  16  to  42  per  cent.  Using  exact  figures  (from  the  Missouri 
suit)  we  find  the  following  price  changes  for  the  six-foot  binder : 

Average  Prices  for  6-foot  Binder 
Year  Price  to  farmer  Price  to  dealer 

1878  $360  $270 

1879  340  278 
1881  276  225 
1884                240  195 

1890  140  112 

1891  125  100 

1892  140  112 

1895  to  '98  135  to  130  105  to  95  . 

1900  130  100  to  105 

1901  130  100 

1902  125  97.50 

1903  to  '08  120  95 
1908                125  to  130           100.00 

The  Kansas  Commissioner  gave  retail  cash  prices  for  the  period 
1903-1907,  as  follows: 

8  ft.  grain  binder  with  tongue  truck $145.00 

4K  ft.  mower 45.00 

On  the  question  of  quality  and  improvements,  the  Kansas 
Commissioner  finds  as  follows: 

"  Improvements  in  Machines. — The  experimental  department  is  main- 
tained at  an  annual  cost  of  from  $300,000  to  $350,000.  The  specific  improve- 
ments of  machines  making  for  efficiency  and  durability  have  been  too  numer- 
ous to  cite  in  detail.  In  brief  the  evidence  shows  that  the  basic  patents  on 
binders  and  mowers  have  all  expired,  but  that  the  International  Harvester 
Company  of  New  Jersey  constantly  endeavors  to  procure  new  devices  for 
improving  the  machines  it  manufactures  for  the  company;  that  on  an  average 
it  takes  out  seventy-five  patents  a  year.  The  evidence  shows  that  the  local 
dealers  and  farmers  in  Kansas  consider  that  the  machines  sold  by  the  defendant 
are  distinct  improvements  over  the  machines  sold  in  the  state  prior  to  1903. 
The  evidence  further  is  clear  that  the  machines  are  constantly  improving, 
that  they  are  now  more  efficient  and  durable.  They  do  not  have  to  be  repaired 
as  often,  and  are  less  comphcated  (Figs.  15,  16,  and  17). 


PRICES  AT  HOME  AND  ABROAD 


121 


"Repairs. — Prior  to  the  time  the  defendant  commenced  doing  business  in 
Kansas,  both  the  farmer  and  the  retail  dealer  often  experienced  difficulty  in 
obtaining  machines  and  repairs  during  a  busy  harvest  season.  None  of  the 
companies  doing  business  in  Kansas  prior  to  1902  had  general  agents  at  Con- 
cordia, Hutchinson  or  Parsons.    They  were  forced  to  send  to  Kansas  City, 


Fig.    15. — Evolution  of  the  reaper.     The  1S47  niodol,  MoCorniick  rcnpcr  at  work. 


1-  iG.   Iti. — Evolution  of  the  reaper.    The  1858  model,  McCormick  automatic  self -rake  reaper. 

Wichita  or  Topeka  for  repairs.  The  defendant  is  the  only  company  doing 
a  farm  implement  business  in  Kansas  that  adopts  the  system  described.  To 
get  repairs  from  other  concerns  the  dealer  must  send  to  Kansas  City,  Missouri. 
This  often  involves  a  delay  from  which  damage  to  crops  results." 

Prices  at  Home  and  Abroad. — The  Kansas  findings  are  in  these 
words:  ^'The  prices  of  the  company  on  its  goods  sold  in  foreign 
countries  are  higher  than  those  charged  to  the  domestic  trade.'' 


122     AGRICULTURAL  MACHINERY  AND  TRUST  QUESTION 

Earnings. — ^A  correct  table  of  earnings  of  this  company  for 
its  first  eight  years  is  found  in  the  Petition  of  the  United  States 
in  the  federal  district  court  for  Minnesota,  and  is  as  follows: 

Dividends  on  Capitol  Stock 

Per  cent 

1903 3.00 

1904 4.00 

1905 4.00 

1906 4.00 

1907 3.50 

1908 3.50 

1909 3.50 

1909  stock  dividend 16.66 

1910 5.29 

Average 5.92 


Fig.  17. — Evolution  of  the  reaper.    The  modern  self-binder. 

The  Case  for  and  Against  the  Harvester  Company. — As  these 
lines  are  being  written  a  suit  is  pending  before  the  United  States 
Supreme  Court  for  the  dissolution  of  this  Company.  The  dissolu- 
tion is  sought  under  the  Sherman  Anti-Trust  Act,  the  official  title 
of  which  is  ^'An  act  to  protect  trade  and  commerce  against 
unlawful  restraints  and  monopolies."  Attempted  enforcements 
of  the  Sherman  Act  are  putting  the  question  squarely  up  to  the 
voter,  which  one  of  four  possible  economic  orders  of  society  does 
he  desire,  namely,  (1)  Competition,  (2)  Combines,  regulated  by 
pubUc  authority,  (3)  Cooperation,  (4)  State  Socialism.  Since  the 
aim  of  the  pending  suit,  just  mentioned,  is  to  destroy  a  combine 
and  restore  competition,  it  is  very  timely  at  this  point  to  state 
both  sides  of  the  controversy. 

For  the  Harvester  Company. — In  its  numerous  lawsuits,  the 
International  Harvester  Company  has  averred  that  it  has  caused 
the  following  distinct  advantages  to  the  public  over  the  conditions 


FOR  THE   HARVESTER  COMPANY  123 

and  methods  existing  in  the  trade  prior  to  the  formation  of  the 
merger,  nearly  all  of  which  benefits  have  grown  out  of  its  large 
resources,  facilities,  and  organization: 

(1)  Harvesting  machines  have  been  improved  in  quality,  dur- 
ability and  efficiency  much  more  in  the  years  since  the  merger  than 
in  the  same  number  of  years  before  the  merger.  The  best  features 
in  each  of  the  machines  formerly  made  by  the  different  companies 
have  been  incorporated  in  all  the  machines  made  by  the  Company, 
and  the  advance  in  improvements  has  been  broad  and  rapid.  The 
Company  has  maintained  an  experimental  department  to  develop 
new  machines  and  improvements  at  an  average  annual  expense  of 
more  than  $500,000,  which  none  of  the  old  companies  could  or 
would  sustain,  and  during  its  first  nine  years  it  expended,  in  im- 
proving its  six  types  of  binders  and  mowers  more  than  $600,000. 
By  producing  specially  for  its  own  uses  the  lumber,  iron  and  steel 
for  making  harvesting  machines,  the  Company  has  been  able  to 
eliminate  certain  expensive  middlemen,  to  the  advantage  of  the 
farmer,  and  thus  to  increase  the  efficiency  and  durability  of  the 
machines  without  a  corresponding  increase  in  cost. 

(2)  The  methods  and  facilities  of  distribution  have  been  greatly 
improved  and  enlarged;  and,  by  the  wider  distribution  of  harvest- 
ing machines  and  all  repair  parts  on  a  commission  basis,  local  dealers 
are  better  enabled  to  carry  large  stocks  of  both.  These  repairs 
are  more  accessible  to  farmers  than  was  formerly  the  case.  A 
large  corps  of  experts  and  repair  men  is  maintained  whose  services 
are  quickly  available  to  the  farmers  and  often  without  charge. 

(3)  Large  economies  have  been  made  by  the  development  of 
new  lines  of  farm  machinery.  The  harvester  plants  merged  in 
1902  were  making  only  binders,  reapers,  mowers  and  rakes,  and 
were  practically  idle  several  months  of  the  year  because  the  selling 
season  in  those  lines  in  the  United  States  is  only  about  four  months. 
By  developing  new  lines  an  all-year  employment  has  been  given 
to  very  much  larger  manufacturing  and  selling  forces  than  were 
employed  by  the  old  companies.  Among  the  new  lines  developed 
are  wagons,  manure  spreaders,  gasoline  engines,  cream-separators. 

(4)  Foreign  trade  in  agricultural  implements  has  been  devel- 
oped and  expanded  from  $10,000,000  in  1902  to  $42,000,000  in 
1911  (Figs.  18  and  19). 

(5)  Wages  and  conditions  of  employees  have  been  improved 
by  the  Company.  Tn  the  first  nine  years  wages  were  increased 
twenty-seven  per  cent.  Sanitary  and  safety  appliances  have  been 
installed  and  maintained  with  the  most  rigid  system  of  inspection. 


124     AGRICULTURAL  MACHINERY  AND  TRUST  QUESTION 

(6)  The  Company  avers  that,  unhke  the  illegal  trusts  and 
combinations,  it  is  controlled  and  managed  by  men  whose  fathers 
originally  developed  the  harvesting  machine  business  in  which 
there  has  been  continuous  management  and  development  for  a 


Fio.  18. — ^American  farm  nuuhinery  m  Siberia. 


Fig.  19. — Farming  in  Italy — using  American  mowing  machines. 

period  of  more  than  fifty  years;  that  it  was  organized  without 
excessive  capitalization  and  without  any  purposes  of  securing 
quick  fortunes  from  stock  sales  or  excessive  earnings,  and  that 
beneficial  results  have  been  secured  to  the  public  in  greater  meas- 
ure than  to  the  stockholders.  The  company  avers  that  during 
the  twenty  years  prior  to  its  organization  in  1902,  more  than  fifty 
competitors  had  been  eliminated  from  the  harvesting  machine 


AGAINST  THE  HARVESTER  COMPANY  125 

business,  and  that  since  that  time  there  has  been  no  such  elimina- 
tion of  competitors.  The  cost  of  raw  materials  and  labor  increased 
fully  25  per  cent  since  1902,  yet  the  prices  of  harvesting  machines 
were  not  raised  until  1908,  and  then  only  7  per  cent,  and  for  1912 
there  was  a  reduction  of  about  5  per  cent.  The  net  earnings  of 
the  company  for  this  time  averaged  5.91  per  cent. 

In  short,  the  Company  says,  ''The  Government  ought  not  to 
be  permitted  to  urge  in  a  court  of  equity  that  such  a  corporation 
is  in  itself,  and  without  regard  to  its  practices  and  effects,  illegal 
and  should  be  destroyed." 

In  other  words,  a  ''good"  trust  is  better  than  competition,  and 
hence  should  not  be  dissolved. 

Against  the  Harvester  Company. — There  is  no  such  thing  as  a 
good  or  benevolent  trust,  the  government  contends.  All  combina- 
tions which  break  down  the  competitive  system  are  in  restraint 
of  trade.  It  is  apparent,  says  the  government,  that  the  objections 
to  substituting  a  despotic  orgsftiization  of  industry  for  the  competi- 
tive system  were  quite  as  much  social  and  political  as  economic, 
and  therefore  it  would  not  have  satisfied  Congress  to  be  told,  as 
the  Company  now  is  saying,  that  the  power  which  they  feared 
was  thus  far  being  exercised  benevolently,  that  prices  had  not 
been  raised,  nor  wages  lowered  nor  the  quality  of  the  products 
degraded,  nor  competitors  oppressed.  In  their  minds  the  mere 
existence  of  such  powerful  combinations  was  an  evil — a  continuing 
danger — from  which  in  the  long  run,  if  not  immediately,  would 
come  disaster.  For,  as  in  the  organization  of  government,  benevo- 
lence can  never  justify  absolutism,  neither  can  it  do  so  in  the  organ- 
ization of  industry.  The  fundamental  contentions  of  the  company 
(that  the  anti-trust  law  prohibits  only  combinations  injurious  to 
the  public  by  raising  prices,  limiting  production,  deteriorating 
quality,  decreasing  wages,  or  oppressing  competitors)  loses  sight, 
says  the  government,  of  the  broader  purpose  and  basis  of  the  act. 
It  fails  to  take  into  account  that  the  view  of  public  policy  upon 
which  Congress  legislated  was  not  to  wait  until  the  evils  of  undue 
concentration  of  economic  power  have  occurred  or  become  imminent 
and  then  attempt  to  restrain  them,  but  to  prevent  their  occur- 
rence by  striking  at  undue  concentration  of  economic  power  itself. 

Here  the  reader  has  both  sides.  He  will  make  his  own  choice, 
for  or  against  competition.^ 

^  Since  the  above  statements  were  written,  the  International  Harvester 
Company  has  voluntarily  formulated  a  plan  for  dissolution  satisfactory  to 
the  federal  courts. 


126     AGRICULTURAL  MACHINERY  AND  TRUST  QUESTION 

The  Independent  Harvester  Company.— A  few  years  ago 
twenty-seven  thousand  farmers  brought  suit  against  the  Inde- 
pendent Harvester  Company  of  Piano,  Ilhnois.  These  farmers 
held  over  six  million  dollars  of  stock  in  this  company.  Since  this 
company  was  so  widely  advertised  as  a  cooperative  concern,  and 
as  a  farmer's  company,  and  in  this  guise  secured  the  farmers' 
support,  a  brief  account  of  its  operations  is  in  place  here.  It  was 
neither  a  farmers'  company  nor  a  cooperative  concern. 

Troubles  under  the  old  management  of  this  company  came  to 
a  head  when  a  committee  of  farmer  stockholders  in  the  summer  of 
1913  brought  in  a  report  and  filed  a  bill  in  the  United  States  Dis- 
trict Court  at  Chicago,  containing  seventy-one  counts  against  the 
management  and  praying  for  relief.  Some  of  these  counts  set 
forth  that  the  then  management  of  the  company  had  ''organized 
a  stock  seUing  campaign,  and  for  four  years  or  more  have  devoted 
all  the  time  and  energy  of  the  officers  and  a  large  number  of  em- 
ployees of  the  corporation  to  selling  stock,  have  expended  large 
sums  in  advertisements,  employed  sales  agents  for  stock,  commis- 
sions as  high  as  thirty  per  cent  of  the  sales  .  .  .  That  stock  sales 
were  conducted  for  the  sole  purpose  of  paying  salaries,  expense 
accounts,  and  profits  to  the  individuals  in  the  management;  that 
more  than  $3,000,000  worth  of  stock  has  been  sold  during  the  past 
two  years;  that  the  management  diverted  the  corporation's 
purpose  from  manufacturing  machinery  to  the  sale  of  stock; 
that  it  conspired  to  continue  stock  sales  and  neglect  manufac- 
turing; that  the  mismanagement  and  fraudulent  misrepresenta- 
tions of  defendants  so  injured  the  reputation  of  the  company 
and  its  products  that  advertisements  were  refused  by  farm  and 
other  journals,"  etc. 

This  company  gave  the  impression  in  its  advertising  that  it 
was  a  farmer's  cooperative  company.  Some  so-called  cooperative 
journals  carried  this  fraudulent  advertising.  Many  refused  it. 
The  president  of  the  company  in  reply  to  a  letter  from  the  editor 
of  a  genuinely  cooperative  journal,  wrote:  "We  do  not  consider 
ourselves  strictly  cooperative,  and  whether  we  can  be  made  so  is 
problematic.  We  have  tried  to  figure  it  out  from  all  standpoints, 
but  it  seems  as  though  the  law  at  the  present  time  and  the  way  in 
which  we  are  organized  would  not  permit  of  it  in  the  same  sense 
as  the  Rochdale  plan  ...  On  the  other  hand,  we  have  about 
three  thousand  farmers  that  are  voters  of  the  company,  and  the 
balance,  about  thirteen  thousand,  are  non-voters.  .  .  .  We  are 
expecting  to  spend  $30,000  in  advertising  between  now  and  March 


THE  INDEPENDENT. HARVESTER  COMPANY  127 

1,  and  took  it  for  granted  that  it  would  be  patronizing  men  that 
we  believe  in,  and,  by  sending  you  an  advertisement,  at  the 
same  time  be  a  help  in  the  efforts  which  you  and  your  paper  are 
putting  forth."  ^  The  president  of  the  company,  in  fact,  acknowl- 
edged it  to  be  not  cooperative.  One  very  widely  circulated  pam- 
phlet issued  by  the  company  bore  these  words  prominently  on 
the  front  cover:  ''Cooperative  Manufacturing  of  Implements. 
General  Farm  Machinery  and  Gasoline  Engines — What  the  Farmer 
is  Doing  for  Himself — The  Farmer's  Company — Not  in  the  Trust." 
On  the  inside  cover  we  read  such  sentiments  as  these: 

"Bujdng  from  the  Trust  means  prosperity  for  the  Trust.  Why  not 
cooperate  for  your  own  independent  profit?  Chapter  one  in  the  battle  for 
farmer's  independence.  Striking  the  blow  for  farm  freedom  at  the  psycho- 
logical moment  of  history.  Every  fight  has  its  crisis — the  moment  when  a 
feather's  weight  one  way  or  the  other  turns  defeat  into  victory.  The  struggle 
of  American  farmers  for  freedom  from  trust  tyranny  is  at  that  crisis  to-day. 
The  Harvester  monopoly,  by  tightening  its  grip  on  the  situation,  has  forced 
thousands  of  individual  farmers  to  submit  to  its  demands." 

This  same  pamphlet,  issued  about  the  year  1912,  describes  the 
beginning  of  the  Independent  Harvest  Movement,  and  goes  on  to 
describe  its  management.  ''From  the  beginning,"  says  the  pam- 
phlet, "the  same  conservative  methods  have  prevailed  in  the 
Independent  Harvester  Company's  management— a  conservatism 
that  is  ever  alive  for  the  latest  progress  in  machinery  manufactur- 
ing, but  holds  fast  to  the  old  fashioned  ideals  in  its  dealings  with 
every  customer." 

About  the  time  this  pamphlet  was  issued,  describing  the  com- 
pany's "conservative  management,"  a  committee  of  three  men, 
representing  various  groups  of  stockholders,  made  a  "Committee's 
Report  to  Stockholders"  under  date  of  December  18,  1912,  and 
set  forth  the  details  of  a  meeting  which  they  had  held  with  some 
representatives  and  stockholders  of  the  company  at  Piano,  Illinois. 
Among  other  things,  the  report  states:  "Various  phases  of  the 
harvester  company  were  discussed.  The  millions  contributed  by 
the  investors,  and  the  few  machines  to  distribute  after  seven  years 
of  promise  were  data  for  serious  consideration  ...  It  was  appar- 
ent from  the  first,  however,  that  there  was  no  disposition  to  meet 
our  inquiries  with  full  and  complete  answers.  No  very  definite 
estimate  was  made  as  to  the  company's  output  of  machines  Jfor 
the  present  year,  excepting  that  there  was  a  substantial  increase. 
Questioned  as  to  the  cost  of  the  output  of  last  year,  Mr.  B.  elabor- 

2  Letter  to  Editor  E.  M.  Tousley,  "Cooperation"  (MinneapoUs),  July, 
1913,  p.  275. 


128     AGRICULTURAL  MACHINERY  AND  TRUST  QUESTION 

ated  on  the  necessity  of  a  cost  system,  and  the  length  of  time 
required  to  put  one  in,  saying  it  would  take  about  a  year.  When 
pressed  as  to  the  per  cent  of  profit  in  the  manufacturing  end  of 
the  business,  nothing  definite  was  forthcoming  except  beads  of 
perspiration  on  the  brow  of  the  auditor.  We  do  not  know  whether 
the  business  is  on  a  paying  or  losing  basis,  so  far  as  figures  obtained 
.  .  .  Mr.  T.  (the  president  of  the  company)  stated  that  he  owned 
seven  hundred  and  eight  shares  of  the  stock  in  the  company. 
Upon  being  questioned  as  to  his  salary  as  president,  he  said,  '  One 
thousand  dollars  per  month,  and  that  is  not  enough.'" 

The  suit  against  the  former  officials  of  the  Independent  Har- 
vester Company  came  to  an  abrupt  end  in  1917,  when  the  govern- 
ment, after  four  years  of  preparation,  went  down  to  defeat.  The 
United  States  District  judge  took  the  case  from  the  jury  and  threw 
it  out  of  court.  The  court  held  that  the  goverrmient  had  failed 
to  prove  that  there  was  any  intent  on  the  part  of  the  defendants 
to  defraud  purchasers  of  stock  in  the  company  as  charged,  and 
that  the  evidence,  on  the  contrary,  showed  that  the  defendants 
were  sincere  in  their  belief  that  the  company  would  be  a  glowing 
success,  a  clear  case  of  '^  sincere  even  if  visionary  optimism." 
When  the  company  got  into  trouble,  an  entirely  new  management 
took  charge  of  it  (in  June,  1913).  The  manufacturing  end  of  the 
business  was  systematized,  and  a  sales  organization  was  built  up. 
A  *'through-the-dealers-only"  policy  of  distributing  the  products 
was  adopted  and  adhered  to.  The  twenty-four  thousand  farmer 
stockholders  buy  the  product  through  regular  dealers.  A  full  line 
of  binders,  mowers,  and  general  farm  machinery  is  offered  by  the 
company.  But  the  reorganized  company  is  suffering  from  the 
handicap  imposed  by  the  early  exploitation  of  the  word  ''coopera- 
tion" in  connection  with  heavy  promotion  costs.  Damage  was 
done  both  to  the  cause  of  real  cooperation  and  to  this  company 
as  a  manufacturer  and  distributor  of  farm  machinery. 

The  financial  affairs  of  this  company,  however,  went  from 
bad  to  w^orse,  after  the  company  once  got  into  the  courts.  In  the 
year  1918  the  assets  of  the  Independent  Harvester  Company  of 
Piano,  Illinois,  were  sold  to  the  Independent  Harvester  Company, 
Limited,  for  $604,506.21.  Other  items  of  expense  put  the  cost  up 
to  about  $1,000,000.  Under  this  reorganization  neither  the  pre- 
ferred nor  the  common  stockholders  could  hope  for  any  return  of 
any  part  of  their  investment  unless  they  advanced  20  per  cent  of 
their  original  investment  for  notes  of  the  new  company,  running 
one  year. 


REFERENCES  129 

In  some  foreign  lands  the  promoter  is  required  to  put  forth 
his  prospectus  in  printed  form,  and  is  then  held  civilly  and  crim- 
inally liable  for  all  statements  therein.  Such  a  ''Blue  Sky  Law" 
in  this  country  would  doubtless  save  the  farmer  from  being  victim- 
ized on  many  an  occasion. 

The  question  is  still  unsolved,  however,  of  cooperation  and 
combine,  on  the  one  hand,  versus  competition  on  the  other  hand. 

QUESTIONS  ON  THE  TEXT 

1.  Show  briefly  the  increase  in  use  of  labor  saving  machinery.    Cite  concrete 

examples — the  Georgia  planter;  M.  F.  Greeley's  testimony. 

2.  Show  increase  in  value  of  agricultural  machinery  per  acre. 

3.  Show  how  this  machinery  lowers  cost  of  production  (figures  for  com, 

hay,  wheat). 

4.  Show  in  what  sense  agriculture  is  now  "capitalistic." 

5.  Explain  the  probable  effects  of  a  greatly  increased  production. 

6.  Show  the  change,  during  the  last  hundred  years,  in  the  method  of  obtain- 

ing tillage  tools.  This  change  has  brought  forth  what  economic  and 
social  problems?  State  briefly  diff'erent  schemes  used  by  farmers  for 
improving  the  methods  of  obtaining  tillage  tools?  What  method  or 
methods  prevail  to-day? 

7.  Give  the  history  of  the  International  Harvester  Company. 

8.  Cite  the  six  advantages  in  manufacturing  and  distributing  farm  imple- 

ments claimed  by  this  Company. 

9.  Cite   the  objections  to  this  form  of  manufacturing  and   distributing, 

formulated  by  the  Government  in  its  suit  against  this  Company. 

10.  What,  in  brief,  is  the  issue  involved? 

11.  Give  the  history  of  the  Independent  Harvester  Company,  and  show  what 

economic  and  social  problems  were  involved. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Show  relation  of  increased  production  to  an  increase  in  rent;  to  a  decrease 

in  rent.    Formulate  a  rule  governing  this  relationship. 

2.  What  would  be  the  ideal  method  for  farmers  to  obtain  their  tillage  tools? 

3.  Should  combines  among  manufacturers  of  tillage  tools  be  prohibited  or 

encouraged?    Reasons  for  your  answer. 

4.  State  chief  reasons  for  combines  among  farmers  ("cooperative  associa- 

tions") for  large-scale  deahngs.  Do  these  same  reasons  apply  to  others 
than  farmers?    Reasons  for  your  answer. 

5.  Should  "all  combinations"  be  prohibited?     Should  some  combinations 

be  prohibited?    Formulate  a  rule  in  the  interest  of  pubhc  pohcy. 

REFERENCES 

1.  Report  of  the  Industrial  Commission,  Vol.  X,  Washington,  1898-1902. 

2.  QuAiNTANCE,  H.  W. I  "The  Influence  of  Farm  Machinery  on  Produc- 
tion and  Labor."  Publications  American  Economic  Association,  3d  series, 
Vol.  5,  No.  4,  Nov.,  1904. 

3.  Report  of  the  Bureau  of  Corporations  on  the  International  Harvester 
Company,  Washington,  1913. 

4.  Briefs  of  the  International  Harvester  Company  and  of  the  federal 
attorneys,  in  the  various  suits  involving  this  company. 


CHAPTER  IX 

MARKETING  AND  THE  MIDDLEMAN 

Four  Steps  in  Marketing. — In  recent  years  the  discussion  of 
marketing  has  taken  the  form  of  a  crusade  against  the  middleman. 
However,  the  so-called  ''marketing  problem,"  when  studied,  is 
found  to  break  up  into  four  separate  problems,  namely,  produc- 
tion, storage,  transportation,  and  credit.  In  other  words,  when 
these  four  problems  are  solved,  the  ''middleman  problem"  will 
disappear.  (1)  The  production  of  a  good  product  is  the  first  and 
most  important  step  in  marketing.  It  is  never  difficult  to  sell 
products  of  the  best  grade.  The  daily  market  reports  and  price 
currents  indicate  brisk  demand  at  good  prices  for  the  better  grades 
of  farm  products,  but,  at  the  same  time,  the  markets  are  often 
glutted  with  poorer  grades.  To  put  a  high-grade  product  on  the 
market,  particularly  if  it  be  inspected  and  graded  and  standard- 
ized, is  to  take  the  first  and  biggest  step  in  marketing.  (2)  Storage 
is  a  step  made  necessary  with  most  farm  products  by  reason  of 
their  production  in  the  summer  time  and  their  consumption  at 
other  seasons.  These  crops  accordingly  must  be  stored  some 
place  by  somebody,  and  the  middleman  accordingly  usually  enters 
at  this  point  to  begin  his  services.  Some  highly  perishable  products 
show  a  tremendous  shrinkage  in  storage.  Thus  the  southern  sweet 
potato,  needing  warm  dry  storage  in  winter,  shows  an  annual  loss 
in  storage  estimated  at  one  hundred  million  dollars.  The  white 
potato  of  the  north,  calUng  for  cool,  dry  winter  storage,  also  shows 
a  heavy  waste.  Other  farm  products,  such  as  eggs,  poultry,  grain, 
cotton,  and  so  on,  all  call  for  particular  forms  of  storage  to  bridge 
the  gap  between  time  of  production  and  time  of  consumption. 
In  the  last  analysis,  considering  farmers'  cooperative  storage  ware- 
houses, public  and  private  storage  warehouses  of  all  kinds,  and 
the  consumers'  own  cellars,  the  retailer  is  doubtless  the  chief 
storer  of  food  products.  The  retailer  must  actually  own  and  store 
nearly  100  per  cent  of  the  food  products  which  the  ultimate  con- 
sumer buys.  Here  is  an  important  function  of  the  retailer.  One 
investigator  has  estimated  that  the  annual  waste  by  decay  of 
perishable  food  products  is  40  per  cent.  (3)  Transportation  is, 
next  to  retailing,  the  most  expensive  link  in  the  chain  of  marketing. 
And  the  most  expensive  phase  of  transportation  is  the  haul  over 
130 


STATE  MARKETING  ACTIVITIES  131 

poor  country  roads  before  the  product  reaches  the  railroad  station. 
Lower  freight  rates  may  be  brought  about  by  using  fleets  of  motor 
trucks  for  short  haul  business,  provided  country  roads  are  im- 
proved. An  enormous  leak  in  railway  transportation  is  due  to 
the  shipper  himself,  namely,  the  shipping  of  poorly  packaged 
perishable  freight.  It  is  appalling  to  witness  the  loss  and  damage 
in  foodstuffs  arriving  at  big  city  markets,  losses  due  to  shipping 
in  frail  containers,  or  to  improper  loading  of  correct  containers. 
(4)  Credit  is  the  fourth  step  in  marketing,  and  is  vitally  important 
under  our  present  system  of  doing  business  with  the  smallest 
possible  use  of  money.  We  live  in  a  credit  age.  Credit  is  a  promise 
to  pay  money.  Farmers'  crops  go  to  market  shortly  after  harvest, 
as  a  rule,  and  are  paid  for  in  cash — with  money  borrowed  from  the 
banks.  Hence  credit  must  carry  the  crop  till  it  is  bought  and  paid 
for  by  the  consumer,  months  later  in  many  cases.  It  is  commonly 
the  middleman  or  dealer  who  finances  the  farmer  by  securing 
credit  from  the  bank.  For  this  service  a  "toll"  is  charged.  If  the 
farmer,  in  buying  his  supplies,  uses  book  credit  (''charge"  account 
at  the  store),  he  is  using  the  most  expensive  form  of  credit  known. 

The  reformer  of  our  present  market  system  must  successfully 
solve  the  four  problems  named  above,  if  he  hopes  to  displace  our 
present  system.  Getting  the  farm  products  from  the  producer 
to  the  consumer — in  the  right  quantity,  of  the  right  quality,  at 
the  right  time,  at  the  right  place  (usually  his  kitchen  door)  is 
now  carried  on  by  the  middleman  in  a  remarkably  efficient  manner, 
when  you  take  into  consideration  the  whims  and  fancies  of  the 
consumer,  and  the  more  basic  fact  that  consumption  is  not  rational 
and  never  can  be.  (De  gustibus  non  est  disputandum — ''There  is 
no  disputing  about  tastes.")  Let  us  now  turn  our  attention  to 
the  concrete  attacks  being  made  on  the  marketing  problem  by 
the  various  States. 

State  Marketing  Activities. — The  year  1915  may  be  given  as  the 
date  when  the  States  of  the  Union  began  actual  marketing  activi- 
ties. The  high  cost  of  living  in  recent  years  doubtless  contributed 
to  this  step  by  the  States.  The  long  crusade  against  the  "middle- 
man" may  be  considered  as  a  further  cause  for  the  States  under- 
taking to  deal  with  the  marketing  problem  in  a  new  and  somewhat 
concrete  way.  A  partial  survey  of  the  State  marketing  activities 
may  be  considered  at  this  point,  before  examining  the  actual  costs 
and  services  of  the  middleman. 

Most  of  the  States  are  now  undertaking  some  marketing 
activity.     It  is  a  new  field,  and  they  are  feeling  their  way,  each 


132  MARKETING  AND  THE  MIDDLEMAN 

trying  its  own  ideas.  Only  a  few  of  the  typical  State  systems  can 
be  given  in  any  detail  here.  Among  the  first  States  to  enter  this 
new  field  is  Idaho. 

Idaho. — The  Idaho  law  creates  the  office  of  markets  for  the 
State  of  Idaho,  in  charge  of  a  director  appointed  by  the  Governor. 
The  law  contemplates  three  chief  activities:  (1)  a  free  State 
employment  bureau;  (2)  supervision  of  land  promotion  schemes, 
particularly  of  misleading  advertisements  intended  for  home- 
seekers;  (3)  a  State  market  department.  The  Director  in  charge 
of  this  work,  W„  C.  Scholtz,  confined  his  marketing  activities  at 
first  largely  to  community  and  state-wide  problems,  working  along 
broad  and  fundamental  lines,  leaving  the  individual  work  for  later 
consideration.  This  work  may  be  illustrated  by  the  following 
two  examples. 

Dairy  Products. — The  Director  found  unsatisfactory  conditions 
prevailing  in  the  dairy  industry,  despite  the  State's  natural  ad- 
vantages in  this  field.  He  founded  a  butter  and  cheese  scoring 
organization,  thereby  leading  to  a  standardized  and  higher  quality 
of  produce.  Uniform  accounting  systems  were  introduced  and 
likewise  cooperative  buying  of  supplies.  Along  with  these  activ- 
ities went  a  vigorous  campaign  against  the  unscrupulous  creamery 
promoter. 

Potato  Marketing. — The  1915  potato  crop  was  large,  in  most 
sections  of  the  country,  and  prices  low.  The  Director  found  that 
Idaho  buyers  were  getting  the  Idaho  crop  at  from  45  to  50  cents 
per  hundred.  He  circularized  the  growers  and  advised  them  to 
hold  for  higher  prices,  for  80  cents  at  least,  assuring  them  that 
prices  would  soon  rule  higher.  Within  about  two  weeks  the  price 
actually  rose  to  about  80  cents  a  hundred.  It  should  be  stated  at 
this  point  that  the  actual  forecasting  of  market  prices  is  rarely 
undertaken  by  State  marketing  officials  as  part  of  their  official 
duties. 

Califomia's  law,  passed  June  10, 1915,  is  the  one  which,  without 
doubt,  has  been  enforced  most  vigorously  of  all  of  the  State 
marketing  laws.  And  California,  like  New  York,  has  had  its 
market  bureau  subjected  to  a  torrent  of  very  able  and  very  con- 
tinuous criticism.  Nothing  shows  more  clearly  the  strength,  the 
weakness,  and  the  limitations  of  California's  market  work  than 
this  battle  of  the  critics.  California's  first  law  created  a  State 
Commission  Market,  so  called,  under  the  ''management  and  con- 
trol of  a  governing  body  of  one  person,"  known  as  the  State  Market 
Director,  appointed  by  the  Governor.     The  Governor  appointed, 


CALIFORNIA'S  LAW  133 

as  first  Market  Director,  Harris  Weinstock,  a  man  of  mature  years 
and  wide  business  experience.  A  State  Senator  of  California  began 
a  fight  against  the  administration  of  this  Act,  which  battle  of  words 
throws  much  light  on  the  question  of  correct  State  policy  in  engag- 
ing in  marketing  activities.  The  permanent  value  of  this  debate 
justifies  its  reproduction,  in  part,  at  this  time. 

"The  Senator  believes,"  says  the  Market  Director,  "that  the 
end  in  view  can  best  be  achieved  by  State  Markets,  the  creation 
of  which  he  contends  is  made  mandatory  by  this  law.  I  contend, 
on  the  other  hand,  that  the  best  results  can  be  achieved  by  encour- 
aging producers  to  keep  on  producing,  by  getting  more  people  to 
produce,  by  cutting  out  speculation  in  farm  products  and  by  col- 
lective marketing.  These  things  I  hold  can  be  best  brought  about 
by  cooperative  organization  on  the  part  of  producers,  rather  than 
by  State  markets,  which  under  the  law  are  made  discretionary  on 
the  part  of  the  State  Market  Director — and  not  mandatory,  as 
the  Senator  would  have  us  believe."  In  other  words,  self  help 
must  not  be  weakened,  but  rather  strengthened. 

The  Senator  charged  the  Market  Director  with  organizing  the 
growers  into  marketing  associations,  and  that  these  producers' 
"combines"  were  oppressing  the  consumer  and  increasing  the 
cost  of  hving. 

The  Market  Director  admitted  having  organized  the  following 
groups  of  growers:  California  Peach  Growers;  Poultry  Producers 
of  Central  California;  Poultry  Producers  of  Southern  California; 
Associated  Milk  Producers;  Pacific  Rice  Growers  Association; 
Prune  and  Apricot  Growers;  California  Associated  Olive  Growers. 
The  Director  denied,  however,  that  such  organizations  oppressed 
the  consumer.  The  Director  denied  that  these  "combines"  raised 
prices  to  the  consumers.  Collective  marketing  lessens  the  cost  of 
distribution.  The  Director,  in  answering  the  Senator,  claimed 
that  products  raised  by  unorganized  farmers,  such  as  onions, 
potatoes  and  beans,  increased  in  retail  price  on  the  San  Francisco 
market  in  the  two  years  1915-1917  one  hundred  and  twenty-six 
per  cent,  but  that,  at  the  same  time,  products  raised  by  the  organ- 
ized farmers,  such  as  raisins  and  dried  peaches,  decreased  in  retail 
price  five  and  one-half  per  cent.  The  market  is  stabilized,  says 
the  Director,  by  the  organization  of  the  producers.  "While  it  is 
in  the  interest  of  the  speculator  in  food  products,"  he  says  "to 
squeeze  out  the  highest  possible  price  wherever  this  can  be  done, 
regardless  of  the  welfare  of  the  producer  or  the  consumer,  farmers' 
marketing   associations  are  in  quite  a  different  position.     The 


134  MARKETING  AND  THE  MIDDLEMAN 

producer  has  much  to  lose  and  only  a  temporary  advantage  to 
gain  should  he,  when  working  cooperatively,  artificially  force 
prices  upward.  The  future  welfare  of  the  industry  depends  upon 
increasing  consumption.  Abnormally  high  prices  diminish  con- 
sumption, and  the  temporary  profits  due  to  abnormally  high  prices 
stimulate  overproduction,  both  of  which  effects  seriously  react 
against  the  producer.  Experience  shows  that  cooperative  seUing 
on  the  part  of  producers  has  in  no  instance  put  any  unfair  buxden 
on  the  consumer." 

Considering  that  cooperative  marketing  is  on  trial  in  California, 
the  Director  gives  these  benefits  which  come  to  the  consumer 
through  this  form  of  marketing: 

•     Cooperative  marketing  stands  for  standardizing  qualities,  so 
that  only  products  fit  to  eat  are  allowed  to  go  to  market. 

Cooperative  marketing  stands  for  inteUigent  and  more  economic 
production,  so  that  the  cost  of  production  is  lessened. 

Cooperative  marketing  stands  for  better  packing  so  that  prod- 
ucts reach  the  consumer  in  better  condition. 

Collective  marketing  plans  for  collective  buying  of  all  things 
needed  in  production  and  in  preparing  products  for  market,  thus 
again  lessening  costs. 

Cooperative  marketing  stands  for  eliminating  wastes  in  the 
cost  of  distribution. 

Cooperative  marketing  spells  the  death-knell  of  speculation  in 
food  products,  thus  stabilizing  prices. 

Cooperative  marketing  means  making  national  advertising 
possible,  such  as  has  been  done  by  the  Citrus  Growers  Association 
and  the  California  Associated  Raisin  Company,  which  have 
enormously  increased  the  consumption  throughout  the  country 
for  these  California  products,  thus  greatly  adding  to  the  prosperity 
of  California  and  to  its  people. 

The  consumer  must  inevitably  fall  heir  to  his  fullest  share  of 
all  these  savings,  benefits,  and  advantages,  as  has  been  demon- 
strated in  the  California  citrus  industry,  the  raisin  industry,  the 
peach  industry,  the  almond  industry,  the  walnut  industry,  and 
others,  not  any  of  which  movements  have  ever  put  one  cent  of 
unfair  burden  on  the  consumer;  but,  on  the  contrary,  have  been 
the  means  of  furnishing  him  with  products,  the  best  of  their  kind, 
at  the  lowest  prices. 

Functions  of  a  State  Market  Director. — The  director,  after 
study  and  experience,  decides  that  the  functions  of  a  State  Market 
Commission  should  include  the  following  duties  and  functions: 


LOUISIANA  135 

"(a)  Gather  and  disseminate  information  concerning  supply,  demand, 
prevailing  prices  and  commercial  movements  of  farm  products,  including 
common  and  cold  storage. 

"(6)  Promote,  assist  and  encourage  the  organization  and  operation  of 
cooperative  and  other  associations  and  organizations  for  improving  the  relations 
and  services  among  producers,  distributors  and  consumers,  of  any  such  products. 

"  (c)  Foster  and  encourage  cooperation  between  producers  and  distribu- 
tors of  any  such  products,  in  the  interest  of  the  general  public. 

"(d)  Foster  and  encourage  the  standardizing,  gradmg,  inspection,  label- 
ing, handling,  storage  and  sale  of  any  such  products. 

''  (e)  Investigate  the  practices  and  methods  and  any  transaction  of  com- 
mission merchants  and  others  who  receive,  sohcit,  handle  on  commission  or 
otherwise,  any  such  products,  and  to  protect  and  conserve  the  interests  of 
the  consignor. 

"  (J)  Act  as  a  mediator  or  arbitrator,  when  invited,  in  any  controversy  or 
issue  that  may  arise  between  producer  and  distributor  of  any  such  products. 

"(g)  Certify,  for  the  protection  of  owners,  buyers  or  creditors,  when  so 
requested,  to  warehouse  receipts  for  any  such  products,  verifying  quantities 
and  qualities  thereof,  and  charge  for  such  service  fees  sufficient  to  make  the 
service  at  least  self-supporting. 

"(h)  Issue  labels  bearing  the  seal  of  the  State  Market  Commission  for 
any  such  products  for  which  State  labels  have  not  otherwise  been  authorized 
by  law,  under  such  rules  and  regulations  as  the  Director  may  deem  necessary, 
and  charge  for  such  labels  such  fees  as  in  the  judgment  of  the  State  Market 
Director  may  be  proper. 

"  (i)  Act  on  behalf  of  the  consumers  of  any  such  products  in  conserving 
and  protecting  their  interests  in  every  practicable  way. 

"0)  Act  as  advisor  for  producers  and  distributors,  assisting  them  in 
economical  and  efficient  distribution  of  any  such  products  at  fair  prices. 

"  (k)  Improve,  broaden  and  extend  in  every  practicable  way  the  distri- 
bution and  sale  of  any  such  California  products  throughout  the  markets  of 
the  world. 

"  (/)  Reduce  in  every  practicable  way  the  expense  and  cost  of  marketing 
said  products,  that  the  producer  may  secure  more  adequate  returns  and  the 
consumer  a  lower  cost. 

"(m)  Promote  in  the  interest  of  the  producer,  the  distributor  and  the 
consumer,  economical  and  efficient  distribution  and  marketing  of  all  or  any 
agricultural,  fishery,  dairy  and  farm  products  produced,  grown,  raised,  caught, 
manufactured  or  processed  within  the  State  of  California." 

The  first  California  law  was  replaced  by  a  new  law,  creating  a 
''State  Market  Commission,"  embodying  the  principles  laid  down 
by  Director  Weinstock.  The  same  director  was  continued  in 
charge.  In  other  words,  the  principles  of  self  help  and  the  collec- 
tive bargain  were  endorsed  and  accepted. 

Louisiana. — The  Louisiana  law  provides  for  a  Commissioner  of 
Agriculture  and  Immigration,  whose  chief  function  is  to  foster 
direct  dealing  between  producer  and  consumer.  He  secures  lists 
of  producers  and  their  products  for  sale,  and  these  lists  are  then 
published  broadcast  throughout  the  State  press  and  also  in  the 
form  of  weekly  bulletins,  and  in  this  form  sent  by  mail  to  such 
persons  as  request  them.  Henry  D.  Wilson,  the  first  appointee, 
considered  the  work  not  simply  worth  while,  but  very  important. 


136 


MARKETING  AND  THE  MIDDLEMAN 


Michigan. — The  Department  of  Markets  in  Michigan  was  or- 
ganized under  a  1915  law,  and  James  N.  McBride  became  the 
Market  Director.  The  work  is  under  official  cooperation  with  the 
State  Board  of  Agriculture,  and  the  United  States  Department  of 
Agriculture.  The  work  consists  largely  in  investigation  and  in 
giving  advice.  As  in  California,  cooperative  marketing  is  fostered, 
and  particularly  the  standardization  of  products  and  their  certifi- 
cation by  the  State.    Price  fixing  by  the  Bean  Growers  associations 

is  one  of  the  concrete  problems 
which  quite  early  confronted  the 
Director  of  Markets. 

The  New  York  marketing  work 
came  into  prominence  through  the 
vigorous  efforts  of  its  first  direc- 
tor, John  J.  Dillon  (Fig.  20),  to 
conduct  apple  auction  markets 
for  the  farmers.  The  State  De- 
partment of  Foods  and  Markets, 
located  in  New  York  City,  in 
charge  of  Commissioner  Dillon, 
began  marketing  work  in  1915 
under  a  law  passed  in  1914.  This 
department  cooperated  with  the 
State  Department  of  Agriculture, 
the  State  Agricultural  College,  the 
county  farm  bureaus,  the  granges 
and  cooperative  associations,  and 
the  United  States  Department 
of  Agriculture.  The  chief  functions  were  to  investigate;  to  conduct 
auctions;  to  study  transportation  matters  and  delays;  to  estabUsh 
markets,  general  and  local;  and  to  encourage  cooperative  associa- 
tion work.  The  direct  marketing  activities  of  this  Department 
attracted  nation-wide  attention.  By  cooperating  with  the  Fruit 
Auction  Company,  a  considerable  quantity  of  peaches  and  apples 
were  sold  at  auction.  Commissioner  Dillon  considered  the  auction 
method  to  be  correct  in  principle,  and  entirely  feasible  and  desir- 
able in  large  market  centers. 

The  New  York  Department  of  Foods  and  Markets  pursued  a 
militant  course  from  the  start.  The  New  York  bakers  were  forced 
to  restore  the  five-cent  loaf  of  bread,  after  raising  it  to  six  cents. 
The  price  of  cold  storage  eggs  was  attacked.  Jobbers  and  retailers 
were  required  to  post  signs  on  ''cold  storage"  eggs.    To  help  the 


Fig.  20. — John    J.    Dillon   of   New  York 
(Underwood  &  Underwood.) 


NORTH  CAROLINA  137 

milk  production  interests,  an  auction  of  dairy  cows  was  held  under 
the  supervision  of  the  Department.  Farm  shippers  used  the  De- 
partment in  investigating  claims  against  transportation  companies. 
A  hay  auction  in  New  York  City  was  undertaken  but  abandoned. 

Commissioner  Dillon  conceived  the  need  of  his  State  to  be  as 
follows:  ''The  first  need  of  the  producers  of  New  York  State  is 
to  help  them  to  organize  into  geographical  or  industrial  groups,  and 
then  to  federate  these  units  into  one  strong  central  agency.  This 
agency,  by  the  help  of  the  Department,  would  catalog  the  principal 
crops  of  the  State;  know  where  they  are  located;  know  their  condi- 
tion and  see  that  they  are  properly  graded  and  packed.  It  would 
keep  advised  of  the  conditions  of  the  markets  in  the  principal 
cities  of  the  country,  and  be  in  a  position  to  direct  shipments 
where  the  best  prices  prevail." 

New  York  passed  a  new  law  in  the  year  1918,  consolidating 
the  old  Departments  of  Agriculture,  Foods  and  Markets,  Weights 
and  Measures,  and  the  Cold  Storage  Administration  of  the  Health 
Department  into  a  new  Department  of  Farms  and  Markets.  This 
new  Department  in  turn  was  divided  into  two  Divisions,  Division 
of  Agriculture  and  Division  of  Foods  and  Markets.  Under  the 
Division  of  Foods  arid  Markets  were  created  seven  Bureaus,  as 
follows:  Bureau  of  Markets  and  Storage;  Bureau  of  Cooperative 
Associations;  Bureau  of  Food  Standardization;  Bureau  of  Food 
Products;  Bureau  of  Licenses;  Bureau  of  Weights  and  Measures; 
Regulative  Bureau.  Under  this  law  the  Stnte  of  New  York  is 
equipped  ^vith  the  most  complete  administrative  machinery  in 
the  field  of  marketing  to  be  found  in  the  United  States.  Aside 
from  investigation,  advice,  etc.,  provided  for  in  all  recent  market 
laws,  this  New  York  law  provides  for  the  establishment  of  public 
markets  in  cities,  towns  and  villages,  and  for  State  financial  aid  to 
these  markets  to  the  extent  of  fifty  per  cent  of  the  expense. 

North  Carolina. — This  state  is  very  active  in  its  marketing 
work.  This  work  is  done  by  the  Division  of  Markets  and  Rural 
Cooperation,  located  at  the  Agricultural  Experiment  Station,  and 
its  Chief  is  responsible  to  the  Director  of  the  Experiment  Station. 
This  marketing  w^ork  is  done  in  official  cooperation  with  the  State 
Department  of  Agriculture  and  the  Bureau  of  Markets  of  the 
United  States  Department  of  Agriculture.  The  chief  work  falls 
under  four  heads — publication  of  weekly  lists  of  farm  products  for 
sale;  investigations  into  marketing  practices;  promoting  coopera- 
tive organizations,  particularly  credit  unions;  and  demonstrating 
proper  cotton  grading. 


138  MARKETING  AND  THE  MIDDLEMAN 

Ohio's  law,  enacted  in  1917,  creates  a  Bureau  of  Markets 
under  the  supervision  of  the  State  Board  of  Agriculture.  The 
law  is  apparently  designed  to  insure  cheaper  products  to  the  con- 
sumer rather  than  to  aid  the  producer.  This  law  provides  for  a 
bureau  which  shall  investigate  the  cost  of  production  and  market- 
ing of  Ohio  food  products,  to  make  rules  and  regulations  for  grad- 
ing, handling,  storage  and  sale  of  food;  to  investigate  the  practice 
and  methods  and  any  specific  transactions  of  commission  mer- 
chants and  others  who  buy  or  handle  food;  to  act  on  behalf  of 
consumers  in  conserving  and  protecting  their  interests  in  every 
practicable  way  against  excessive  prices;  to  develop  direct  dealing 
between  producers  and  consumers;  to  encourage  consumption  of 
Ohio  grown  products;  to  inspect  and  determine  grade  and  con- 
dition of  farm  products  both  at  receiving  and  shipping  centers; 
to  act  as  moderator  or  arbitrator  in  controversies  between  farmers 
and  shippers  which  affect  the  interest  of  consumers;  and  to  gather 
and  disseminate  information  concerning  supply  and  demand,  pre- 
vailing prices  and  shipments,  including  common  and  cold  storage 
of  food  products. 

Pennsylvania. — This  State  was  one  of  the  many  states  which 
passed  marketing  laws  in  the  1917  sessions  of  the  legislature.  The 
Pennsylvania  act  creates  a  Bureau  of  Markets  for  agricultural 
products  within  the  State  Department  of  Agriculture,  in  charge 
of  a  Director  of  Markets  appointed  by  the  Governor  upon  the 
recommendation  of  the  Secretary  of  Agriculture.  The  law  aims 
to  help  both  producer  and  consumer  at  the  same  time.  The 
Director's  duties  include  the  following: 

(a)  Investigate  methods  and  practices  in  the  production,  handling,  stand- 
ardizing, grading,  classifying,  sorting,  weighing,  packing,  transporting,  storing, 
inspecting  and  sale  of  agricultural  products. 

(6)  Gather  and  disseminate  market  information  to  both  producers  and 
consumers. 

(c)  Publish  market  price  bulletins. 

(d)  PubUsh  Usts  of  names  of  producers  with  produce  for  sale. 

(e)  Cooperate  with  the  State  College  and  with  the  Bureau  of  Markets 
of  the  United  States  Department  of  Agriculture. 

(J)  Promote  cooperative  associations. 

(g)  Institute  court  proceedings  to  prevent  unlawful  combinations  or 
agreements  in  restraint  of  trade  or  for  fixing  prices. 

(h)  Put  into  effect  state  grades  and  state  certification  of  agricultural 
products. 

In  this  act  we  find  that  the  problems  of  standardization  of 
products  and  a  state  label  or  certificate  for  the  same  is  very  care- 
fully considered. 


FIELD  AGENTS  IN  MARKETING  139 

Texas  is  a  state  which  has  made  a  very  serious  effort  at  solving 
its  marketing  problems.  In  1915  a  State  Warehouse  and  Market 
Department  at  the  State  capital  was  created,  and  an  appropriation 
of  $66,000  was  made  for  its  administration.  The  work  began  under 
two  managers  and  fifteen  lecturers.  The  Department  is  in  official 
cooperation  with  the  State  Agricultural  Department,  the  State 
Agricultural  College,  the  farmers'  union  organizations,  and  the 
boards  of  trade.  The  law  aims  to  help  the  producer,  rather  than 
the  consumer.  The  principal  activities  are  the  promotion  of  co- 
operative warehousing  and  marketing  in  farm  products. 

In  addition  to  this  Department  the  Agricultural  and  Mechan- 
ical College  maintains  an  Advisor  in  Rural  Economics  and  four 
assistants,  who  work  on  such  problems  as  these :  storing  and  mar- 
keting sweet  potatoes;  farmers'  clubs;  organizing  short  time  rural 
credit  unions;  promoting  the  organization  of  egg  circles,  with 
especial  emphasis  upon  the  need  of  infertile  eggs  for  Texas.  Other 
cooperative  activities  are  also  fostered  and  promoted. 

Washington. — ^A  law  was  passed  in  this  state  in  March,  1917, 
creating  the  office  of  State  Director  of  Farm  Markets,  the  Director 
to  be  appointed  by  the  Director  of  the  Agricultural  Experiment 
Station.    The  Director's  duties  include  the  following: 

(a)  To  investigate  and  promote  efficient  distribution. 

(b)  A  market  news  service  (prices,  supply,  demand,  freight  rates,  etc.). 

(c)  Organize  cooperative  concerns  of  producers  and  consumers. 

(d)  Examine  under  oath  individuals,  officers,  and  employers  dealing  in 
farm  products. 

(e)  Investigate  the  parcel  post. 

(/)   Conduct  employment  bureau  for  farm  laborers. 

(g)  Investigate  transportation  (methods,  delays,  charges). 

(h)  Recommend  legislation. 

Enough  has  been  said  to  show  the  various  methods  of  attack 
on  the  marketing  problem  used  by  different  States.  Some  States 
go  so  far  as  to  do  actual  marketing.  Others  furnish  state  aid  only 
as  a  means  of  promoting  self  help  among  the  farmers.  The  States 
which  are  developing  self  help  are  obviously  dealing  more  funda- 
mentally with  the  problem,  and  consequently  with  better  prospects 
of  ultimate  success. 

Field  Agents  in  Marketing. — Supported  in  part  by  the  state 
and  in  part  by  the  federal  Government,  there  is  now  coming  to  be 
in  each  State  a  marketing  official  known  as  the  Field  Agent  in 
Marketing.  His  work  is  done  in  official  cooperation  between  the 
Bureau  of  Markets  and  the  State  University  or  State  Agricultural 
College.    The  chief  work  of  such  an  agent  is  to  secure  Information. 


140  MARKETING  AND  THE  MIDDLEMAN 

To  a  lesser  extent  he  cooperates  with  producers  in  organizing 
cooperative  associations  and  in  promoting  rural  finance.  The 
Field  Agent  in  Marketing  looks  on  the  furnishing  of  reliable  infor- 
mation as  the  first  step  in  solving  the  marketing  problem.  The 
producers,  it  is  supposed,  when  equipped  with  full  and  accurate 
information  can  organize  their  own  marketing  agencies  and  take 
care  of  themselves,  freely  using,  of  course,  the  advice  and  coopera- 
tion of  the  Field  Agent. 

National  Association  of  Marketing  Officials. — The  state  mar- 
keting officials  and  the  various  Field  Agents  in  Marketing  organ- 
ized an  Association  which  held  its  first  two  annual  meetings  in 
connection  with  the  National  Conference  on  Marketing  and  Farm 
Credit  at  Chicago  in  1915  and  1916.  This  Association  aimed  to 
bring  together  in  one  group  representatives  of  all  shades  of  opinion 
and  all  varieties  of  practice  in  marketing  matters.  However,  it 
failed  to  function.  In  1920  a  new  organization,  the  National 
Association  of  State  Marketing  Officials,  was  formed  at  a  Con- 
ference in  New  York  City.  The  aim  is  similar  to  that  of  the 
old  association. 

Bureau  of  Markets. — The  federal  government  in  1914  estab- 
Hshed  in  the  Department  of  Agriculture  the  Office  of  Markets  and 
Rural  Organization.  Since  the  creation  of  this  office  its  scope  and 
activities  have  been  rapidly  enlarged.  It  is  now  a  Bureau.  Pri- 
marily its  aim  is  to  investigate  and  present  its  facts  to  the  public. 
But  it  has  now  gone  much  beyond  that  stage.  It  aims  to  help 
make  history  as  well  as  merely  to  write  history.  It  fosters  coopera- 
tion, based  on  correct  business  practice.  It  formulates  and  installs 
correct  accounting  systems.  It  establishes  standard  and  uniform 
grades  for  cotton  and  grains.  It  furnishes  telegraphic  market 
information  on  perishable  products.  The  Bureau  of  Markets,  as 
previously  mentioned,  is  in  cooperation  with  the  market  depart- 
ment of  most  of  the  States  with  such  departments,  and  with  the 
Field  Agents  in  Marketing. 

Parcel  Post  Marketing. — The  parcel  post  was  looked  on  by 
some  voters  as  a  promising  method  of  introducing  ''direct  market- 
ing" and  the  elimination  of  the  ''middleman."  The  system  has 
been  tried  very  thoroughly  in  the  United  States,  but  it  has  had 
very  little  success  in  getting  farm  products  direct  from  the  farmer 
to  the  city  consumer.  The  physical  difficulties  have  been  over- 
come. Containers  have  been  devised,  costing  very  little,  which  will 
safely  carry  eggs  or  other  highly  perishable  commodities  a  thousand 
miles  with  a  negligible  per  cent  of  damage  (Figs.  21  and  22). 


PARCEL  POST  MARKETING 


141 


But  the  marketing  difficulties  have  not  been  overcome.  If  there 
is  a  saving  in  price,  who  shall  get  it?  The  farmer  has  felt  that 
the  margin  belongs  to  him  and  should  be  added  to  his  price. 
The  city  consumer  wants  the  product  cheaper  when  dealing  direct 
^vith  the  producer.  Only  a  small  portion  of  farm  products  are 
suited  to  marketing  by  parcel  post.  The  farmer,  to  succeed  in 
parcel  post  marketing,  must  meet  several  standard  market  require- 
ments: the  supply  must  be  fairly  constant  in  both  quantity  and 
quality,  in  order  to  meet  consumer's  orders;  there  must  be  some 


^^!iik\'i^  :iii 

If    tnV        ^^^ 

IIP  iJ'si ...... 

to 

H^I^B^B       ^-^^'^'^-^.^^  '^i 

'^^KLl'fW^K    wl^  1 

^m                           ^^^^m. 

iW'iw  ^VP 

1  Mmmm^ 

mmm  ^ 

'mm* 

lu 

mMim    ■ 

Fig.  21. — Shipping  eggs  by  parcel  post.  (U.  S.  D.  A.) 

standard  grade  or  brand  by  which  both  producer  and  consumer 
can  designate  the  article;  packing  must  be  good  in  appearance 
and  correct  in  preserving  the  goods  properly;  the  question  of  price 
and  the  question  of  time  and  manner  of  payment  must  be  mutually 
understood.  The  two  big  problems  remain — How  find  the  con- 
sumer? and  How  fix  the  price?  Farmers  who  have  tried  parcel 
post  marketing  complain  that  the  city  consumers  ''want  the  stuff 
for  nothing."  The  city  consumer  complains  that  the  produce  was 
of  an  inferior  grade.  Until  standard  grades  and  packs  have  been 
established,  which  will  require  cooperative  associations  among 
farmers,  there  is  little  prospects  for  success  in  parcel  post  marketing 
of  farm  products. 


142  MARKETING  AND  THE  MIDDLEMAN 

The  Cost  of  the  Middleman. — A  few  years  ago  some  writer  put 
into  circulation  the  superstition  that  the  middleman  gets  fifty 
cents  out  of  every  dollar  the  consumer  pays,  and  that  the  farmer, 
in  consequence,  received  but  half  the  price  paid  by  the  ultimate 
consumer.  And  in  more  recent  times  the  middleman's  'HoU"  is 
commonly  given  as  sixty-five  cents  on  the  dollar.  No  earnest 
seeker  after  the  truth  will  be  satisfied  with  such  sweeping  assertions 
as  these.  Since  the  ''toll"  of  the  middleman  varies  greatly  from 
one  product  to  another,  depending  on  the  various  factors  involved, 


Fia.  22.^-Shipping  perishable  farm  produce  by  parcel  post.  (U.  S.  D.  A.; 

it  is  necessary — and  it  is  also  the  honest  way — to  inquire  separately 
into  some  of  the  commoner  articles  of  consumption  coming  from 
the  farm.  Some  of  the  common  articles  considered  below  are 
bread,  meat,  butter,  eggs,  potatoes  and  tobacco.  Careful  studies 
have  been  made  in  all  these  fields  by  federal  and  State  govern- 
ment investigators. 

Wheat  and  Flour. — We  may  trace  wheat  into  export,  till  it 
reaches  the  hands  of  the  Liverpool  buyers,  or  we  may  trace  it  in 
domestic  trade  till  it  passes  as  flour  from  the  retailer  to  the  house- 
holder. Taking  the  Kansas  wheat  crop  of  1914,  we  find  that  the 
Kansas  farmer  got  seventy-five  cents  out  of  the  dollar  paid  by  the 
Liverpool  buyer.  The  various  margins  between  the  Kansas  wheat 
grower  and  the  Liverpool  buyer  were  as  follows: 


J 


MEAT  143 

Kansas  Wheat  1914  ^ 

Cents  per 
bushel 

Price  received  by  Kansas  Farmer 87.0 

Margin  taken  by  local  elevator 3.0 

Freight  to  seaboard 15.0 

Inspection  weighing .25 

Gross  profits  of  grain  merchant 1.25 

Export  elevator,  loading  into  boat,'  etc 1.25 

Ocean  freight 6.0 

Insurance  on  water .75 

Exporter's  expenses 1.0 

Exporter's  profits 1.25 

Price  delivered  in  Liverpool 116.75 

Here  the  biggest  margin  taken  by  any  dealer  is  the  three  cents 
taken  by  the  local  elevator. 

If  we  trace  the  wheat  through  the  mill,  and  as  flour,  into  the 
hands  of  the  housewife,  the  margins  are  as  follows: 

Tiw  1906  Wheat  Crop — Producer  to  Consumer  ^ 

Cents  per 
bushel 

Price  received  by  Kansas  farmer 64.0 

Local  elevator 3.0 

Transportation 8.4 

Inspection,  weighing,  interest  on  draft .25 

Commission 1.0 

Miller 10.0 

Wholesaler 5.0 

Retailer 20.0 

Price  to  householder  of  flour  contained 

in  one  bushel  of  wheat 111.65 

In  this  case,  transportation  and  milling  are  expensive  services 
which  change  the  place  or  form  of  the  wheat.  The  largest  margin 
for  ''handling"  the  product  is  the  retailer's  margin.  This  is  typical 
of  all  commodities,  and  this  retailer's  margin  increases  as  the 
commodity  becomes  more  perishable. 

Meat. — Different  investigations  have  been  made  by  various 
market  experts  into  the  gross  margins  in  the  meat  industry.  One 
careful  investigation  gives  us  these  margins: 

Cattle  Hogs 

Farmer  received 60.5  per  cent  60.2  per  cent 

Freight,  yardage,  feed,  etc 2.4          "  2.1          " 

Packer's  gross  returns 11.3         "  15.4         '* 

Retailer's  gross  returns 25.8         "  22.3 

100  100 

1  Prices  of  wheat  to  Producers  in  Kansas,  etc.  63  Cong.  3  Sess.  House 
Doc.  No.  1271. 

-  Bulletin  of  the  United  States  Bureau  of  Labor  Statistics,  No.  130, 
"Wheat  and  Flour  Prices  from  Farmer  to  Consumer." 


144 


MARKETING  AND  THE  MIDDLEMAN 


But  individual  shipments  vary  so  much  that  it  is  rarely  correct 
to  speak  in  specific  terms  of  the  middleman's  margin.  For  instance, 
here  are  nine  lots  of  cattle: 

Nine  Lots  of  Cattle.    Division  of  the  Consumer's  Dollar 


1 

2 

3 

4 

5 

6 

7 

8 

9 

Farmer                         .  .  . 

79.29 
1.46 
8.44 

10.81 

85.67 
1.51 
4.35 

8.47 

54.69 
4.38 
7.64 

33.29 

79.49 
9.95 
8.68 
1.88 

78.88 
1.92 
3.92 

15.28 

81.64 
2.57 
1.86 

13.93 

67.97 
2.60 
6.53 

22.90 

67.18 
4.97 
6.02 

21.83 

77.78 

Freight,  yardage,  feed.  . 
Packer 

1.86 
6.53 

Retailer 

13.83 

100 

100 

100 

100 

100 

100 

100 

100 

100 

Summary,  Nine  Lots 

Farmer 66  to  75  per  cent 

Freight,  yardage,  etc 3  to    4  per  cent 

Packer 5  to    6  per  cent 

Retailer 15  to  30  per  cent 

Figures  compiled  on  cattle  handled  through  the  South  St.  Paul 
market  showed  these  margins: 

Farmer ' 58  per  cent 

Retailer 30  per  cent 

The  remaining  12  per  cent  is  divided  among  packer,  transpor- 
tation, yardage,  feed,  etc.  While  the  retail  butcher  gets  a  gross 
profit  here  of  thirty  per  cent,  yet  he  has  but  a  small  net  profit, 
owing  to  his  heavy  expenses  and  small  volume  of  business. 

Butter. — The  United  States  Department  of  Labor  issued  a 
series  of  bulletins  on  "Retail  Prices  and  Cost  of  Living  Series." 
Bulletin  No.  164  of  this  series  is  entitled  ''Butter  Prices  from 
Producer  to  Consumer."  Among  the  important  findings  in  this 
bulletin  are  the  margins  as  shown  in  the  following  table : 
Butter— Mar  (Tins,  hy  Per  Cents,  1904,  1910,  1911 


1904 

1910 

1911 

June 

December 

June 

December 

June 

December 

62.5 

9.7 

3.0 

.1 

5.3 

19.4 

70.8 
10.3 

2.2 
.1 

4.7 
11.9 

74.5 

5.9 

2.1 

.1 

4.6 

12.8 

72.9 

7.1 

1.9 

.1 

4.4 

13.6 

70.0 

7.3 

2.4 

.1 

5.3 

14.9 

75.9 

Creamery  margin 

Freight 

6.7 
1.7 

Cartage                    

.1 

Wholesale 

4.3 

Retail.  .           

11.3 

Consumer's  price 

100.0 

100.0 

100.0 

100.0 

100.0 

100.0 

The  producer  is  here  getting  from  two-thirds  to  three-fourths 
of  the  ultimate  consumer's  dollar.  The  retailer's  margin  is,  of 
course,  the  largest  single  margin  by  far.  The  wholesaler's 
margin  remains  small  and  fairly  constant,  owing  to  his  large 
volume  of  business. 

A  Wisconsin  investigation  is  in  substantial  agreement  with 
this    one.      The   Wisconsin    farmer   receives   two-thirds    of    the 


1 


J 


POTATOES  145 

money  paid  by  the  consumer  for  Wisconsin  butter.      Here  are 
the  figures: 

The  Marketing  of  Wisconsin  Butter.^    Who  Gets  the  Money? 

Farmer 67.7  per  cent 

Hauling 4.3 

Creamery 6.7 

Railway 2.3 

Storage 0.5 

Shrinkage . 0.7 

Receiver — jobber — broker 5.0 

Packaging 2.9 

Retailer 9.9 

Eggs. — Tracing  a  dozen  eggs  from  an  Iowa  farmer  to  the  con- 
sumer in  New  York  we  have  the  following  summary: 
Eggs — From  Iowa  Farmer  to  New  York  Consum£r 

Paid  the  Iowa  farmer 60  per  cent 

Profit  of  country  store 0 

Shipper,  gross  profit 3 

Freight 6 

Wholesaler  (receiver,  jobber) 7 

Loss  from  candling 8 

Retailer 16 

Price  to  consumer 100 

The  bulk  of  the  farmer's  eggs  are  consumed  nearer  home,  and 
hence  bring  to  the  farmer  a  larger  margin.  The  loss  from  candling 
is  an  unduly  large  margin.  With  proper  organization  of  producers' 
egg  circles  this  margin  could  be  entirely  eliminated,  and  this 
saving  would  doubtless  go  to  the  producer  in  part,  and  in  part 
to  the  consumer. 

Potatoes. — One  of  our  best  discussions  of  marketing  is  that  by 
L.  D.  H.  Weld.''  He  estimates  that  the  farmer  receives  fifty  cents 
of  the  consumer's  dollar  spent  for  potatoes.  Here  we  have  a 
highly  perishable  product.  Farmers  in  the  northern  States  (where 
most  of  the  potatoes  are  grown)  frequently  store  their  own  potatoes 
in  the  fall,  rather  than  sell  them  to  the  '^ middleman."  A  shrinkage 
of  from  four  to  fifty  per  cent  in  such  a  case  is  common.  Improved 
storage  facilities  will  overcome  this  risk  to  a  certain  extent.  But 
the  ideal  storage  is  difl^cult  to  secure,  since  this  implies  dry,  well- 
ventilated  air,  at  a  temperature  remaining  constant  at  about  33 
degrees.  An  investigation  into  potato  marketing  conducted  by  the 
University  of  Wisconsin  gives  us  this  table  of  middleman's  charges: 

Price  to  farmer  (varies  from  year  to  year) 

Local  dealer's  margin 5  to  10  cents 

Sacks  and  car  linings 3  to    5 

Distributor,  for  finding  a  market 3  to    4 

Freight,  including  firing 8  to  10 

Wholesaler 5  to  10 

Retailer 15  to  30 


3  Bulletin  No.  270,  Agricultural  Experiment  Station,  University  of  Wis- 
consin, June,  1916. 

"  Weld,  L.  D.  H.,  The  Marketing  of  Farm  Products. 

10 


146  MARKETING  AND  THE  MIDDLEMAN 

The  average  retailer's  margin  here  (22)^  cents)  is  typical  of 
all  retail  margins,  namely,  the  largest  taken  by  any  middleman. 
Small  volume  of  sales  and  not  large  profits  account  for  it. 

Tobacco. — The  Kentucky  Agricultural  Experiment  Station  has 
issued  a  report  (Bulletin  202)  on  the  Marketing  of  Burley  Tobacco 
in  central  Kentucky.  This  study  shows,  as  in  other  commodities, 
the  largest  handling  charges  are  those  of  the  retailer. 

The  distribution  costs  are  divided  into  three  main  categories — 
retailer's  gross  profits,  jobber's  gross  profits,  and  the  manufac- 
turer's gross  receipts.    Here  are  the  results  of  the  interesting  study: 

Where  the  Money  Goes — Price  67.08  Cents,  One  Pound,  Average  Brand,  Plug-cut 

Smoking  Tobacco 

I.  Manufacturer's  receipts: 

Growers  gross  receipts  (one-half  is  profit) 8.0 

Preparing  leaf  for  manufacture 5.8 

Cost  of  manufacturing 12.8 

Selling  costs 2.5 

Advertising  costs 5.1 

Freight 2.3 

Internal  revenue  tax 8.0 

Manufacturer's  net  profit 3.8 

II.  Jobber: 

Operating  expenses 3.6225 

Net  profit 1.7441 

III.  Retailer: 

Operating  expenses 10.7332 

Net  profit 2.6833 

Total  cost  to  consumer 67.08 

Citrus  Fruits. — Oranges,  lemons,  and  grape-fruit  are  among  the 
very  perishable  commodities;  are  consumed  thousands  of  miles 
from  the  point  of  production,  and  are  consumed  also  at  seasons  of 
the  year  several  months  from  the  time  of  their  being  picked.  The 
President  of  the  California  Fruit  Growers  Exchange  has  given  us 
a  careful  statement  of  the  various  margins  in  this  industry. 
The  Consumer's  Dollar  ^ 

(Thirty  Citrus  Fruit  Markets:    5485  reports  for  the  year  1914) 

1.  Grower 26.7  cents 

2.  Picking  and  hauling 2.4 

3.  Packing 7.4     '| 

4.  Freight  and  refrigeration 20.5 

5.  Jobber — cost  to  grower  to  sell  to  j  obber .  1.5     " 

6.  Jobber 8.2     " 

7.  Retailer 33.3     " 

100.0 

California  Peaches. — ^Six  thousand  peach  growers  in  California 
organized  for  collective  marketing.  According  to  their  1918 
report,  the  producer  received  the  following  fractions  of  the  con- 
sumer's dollar: 

1916  crop 77      cents 

1917 80.3      " 

5  Powell,  G.  Harold,  Address  delivered  at  the  Eleventh  Annual  Meeting 
Western  Fruit  Jobbers  Association. 


ing    I 


RISKS  FROM  PERISHABILITY 


147 


California  Raisins. — The  California  Associated  Raisin  Com- 
pany distributes  its  own  product  very  widely.  It  was  estimated 
that  the  producer,  on  the  1917  crop,  received  61.2  cents  of  the 
consumer's  dollar. 

California  Almonds. — The  California  Almond  Growers  dis- 
distribute  their  crop  in  very  distant  markets.  On  the  1918  crop 
it  was  estimated  that  the  producer  received  53  cents  of  the  con- 
sumer's dollar. 

Risks  in  Price  Fluctuation. — The  middleman,  dealing  in  perish- 
able produce,  is  often  spoken  of  in  the  press  as  a  ''food  speculator." 
In  a  strict  sense  of  the  term,  every  owner  of  a  perishable  product 
is  a  speculator,  since  he  has  thereby  assumed  the  risk  incident  to 
price  fluctuation  and  incident  to  loss  by  decay. 

Few  producers  realize  the  actual  range  of  price  fluctuation  in 
one  season  on  the  common  forms  of  perishable  farm  products. 
The  following  table,  compiled  in  one  northern  city,  is  believed  to 
be  typical  for  the  whole  United  States. 

Price  Fluctuations  (Unhedged  Produ/^ts),  Minneapolis  Central  Market ^  Season 

of  1907 


Name 

Quantity 

Low  price 

High  price 

Onions 

doz.  bunches 

doz. 

doz. 

bu. 

doz. 

doz. 

doz. 

bu. 

bu. 

doz 

doz. 

doz. 

doz. 

doz.  bunches 

doz.  bunches 

bu. 

bu. 

bu. 

$0.06 
.15 
.25 
.50 
.10 
.35 
.25 
.50 
.75 
.07 
.25 
.35 
.50 
.25 
.25 
.60 
.50 
.50 

$0.15 

.34 

Head  lettuce 

.75 

Spinach .  .  . 

l.'^o 

.20 

Asparagus 

.80 

Beets 

.60 

Peas 

2.00 

Beans 

3.00 
.20 

Cucumbers 

.75 

Cabbage 

.75 

Cauliflower 

2.00 

Carrots 

.60 

.60 

Potatoes 

1.75 

Tomatoes 

5.00 

Melons 

2.00 

(From  an  unpublished  manuscript,  The  Growing  and  Marketing  of  Small  Fruits  and 
Vegetables,  by  D.  W.  Frear.) 

The  smallest  fluctuation  in  price  for  the  season  was  100  per  cent;  the  largest,  900 
per  cent. 

Risks  from  Perishability. — ^According  to  a  careful  study  made 
by  A.  B.  Adams,^  perishable  farm  products  show  losses  from  decay 
of  thirty-five  to  forty  per  cent.  Hence  from  30  to  40  per  cent  of 
the  margin  between  farm  prices  and  retail  prices  of  products 
passing  through  the  middleman's  hands  is  due  according  to  this 
study,  to  losses  from  decay.    This  margin  goes  to  pay  for  goods 

^  Adams,  Arthur  B.,  Marketing  Perishable  Farm  Products. 


148  MARKETING  AND  THE  MIDDLEMAN 

bought  from  farmers,  but  which  never  reach  consumers.  The  loss, 
of  course,  is  added  to  the  price  of  the  goods  as  a  protection  to  the 
dealer.  The  middleman  ''hedges"  or  insures  himself  against  loss 
by  buying  on  a  sufficiently  wide  margin  to  give  him  protection. 
Otherwise  he  fails  in  business.  Mr.  Adams  also  emphasizes  the 
point  that  the  number  of  middlemen  concerned  is  not  the  ruhng 
factor,  but  that  there  are  four  economic  reasons  for  the  present 
big  spread  in  price,  namely:  (1)  The  perishability  of  the  goods; 
(2)  The  great  distance  between  the  producer  and  consumer — 
frequently  a  thousand  miles  or  more;  (3)  These  goods  are  produced 
by  small-scale  units — the  individual  farm,  and  are  consumed  by 
small  scale  units — the  individual  family;  (4)  The  high  expense  of 
caring  for  these  perishable  goods.  Standard  grading  and  standard 
packing,  whether  done  by  the  progressive  individual  farmer,  or 
by  a  farmer's  cooperative  association  (like  the  California  Fruit 
Growers  Exchange  Local  Orange  Packing  Houses)  is  the  first  step 
towards  reducing  these  spreads  in  prices.  Further  remedies  sug- 
gest themselves — such  as  (1)  cold  storage  facilities  for  each  com- 
munity producing  perishables  for  market ;  (2)  facilities  for  canning, 
preserving,  manufacturing  or  otherwise  processing  these  goods 
near  the  point  of  production,  putting  in  the  market  only  the  high 
grade  produce. 

Services  of  the  Middleman. — The  middleman's  service  as  a 
risk-taker  has  already  been  mentioned.  By  careful  study  and  long 
practice  he  becomes  better  able  to  forecast  and  hence  discount  the 
economic  risk.  Time  was,  to  be  sure,  when  there  were  no  middle- 
men. Then,  by  barter  and  by  the  great  annual  fairs  and  markets, 
producers  and  consumers  enjoyed  ''direct  deaUng."  But  gradually 
the  producers  and  consumers,  of  their  own  free  will,  gave  up  these 
forms  of  "direct  dealing."  The  middleman  came  in,  to  bring  goods 
from  distant  points  to  the  place  where  the  consumer  wanted  them 
and  to  collect  and  store  goods,  in  such  quantity  and  of  such  quality, 
as  to  supply  them  to  the  consumer  at  the  right  time,  of  the  right 
amount,  of  the  right  kind. 

In  economic  phraseology,  the  middleman  produced  "time" 
and  "place"  utility,  which  are  just  as  important  as  the  production 
of  the  raw  material  itself,  and  just  as  truly  "productive."  As  one 
writer  so  ably  sums  up  the  economics  of  the  middleman  system: 
"One  of  the  most  noteworthy  ideas  that  results  from  a  study  of 
the  present  retaifing  system  with  all  its  complexities,  is  that  it  is 
the  product  of  an  evolution  extending  back  over  a  great  many 
years,  and  that  during  all  the  intervening  time  there  has  gone  on 


PROBABLE  SvOLUTlON  140 

a  steady,  relentless  elimination  of  all  forms  of  distribution  found 
uneconomical."  ^ 

Selling  is  a  Service. — Farmers  are  slow  to  accept  the  fact  that 
selling,  like  producing,  is  a  service.  The  following  quotation  from 
a  farmers'  company  illustrates  the  reality  of  the  middleman's 
service — a  department  store  being  the  middleman  in  this  case. 

*'An  effort  was  made,  through  advertising  and  personal  soh ci- 
tation, to  sell  direct  to  the  consumer,  but  this  was  found  more 
expensive  than  working  through  large  department  stores  or  com- 
panies owning  a  number  of  grocery  stores.  The  Exchange  had 
sale  days  for  boxed  apples  in  several  cities,  at  which  time  it  offered 
to  deliver  to  any  home  in  these  cities  at  the  flat  rate  of  $2.25  per 
box.  It  cost  the  Exchange  a  fraction  over  36  cents  a  box  to  make 
deliveries,  thus  leaving  $1.89.  Better  prices  resulted  from  an 
arrangement  made  with  some  department  stores,  which  paid  the 
exchange  $2.00  per  box  and  sold  on  certain  days  to  consumers  at 
$2.25  per  box,  the  retail  price  advertised  by  the  Exchange.  The 
Exchange  received  11  cents  more  per  box  in  selling  to  large  dealers 
than  in  seUing  direct  to  the  consumer."^ 

Probable  Solution. — The  middleman  problem  is  largely  a 
problem  of  the  retailer,  for  here  is  where  the  large  margins  are 
taken.  Cooperative  associations  of  producers  can  eliminate  many 
wastes  involved  in  the  first  steps  of  marketing  (getting  a  stand- 
ardized, certificated,  properly  packaged  product)  into  the  hands 
of  the  wholesale  distributors.  But  the  retailing  feature  is  the 
most  serious  part  of  the  problem.  Reformers  have  suggested 
various  solutions. 

''Carry  your  own  bundles  and  save  eight  per  cent,"  says  a 
New  York  editor. 

''I  beheve  it  will  always  be  necessary,"  replies  a  business  man, 
"to  deliver  goods  to  the  purchaser.  Women  have  come. up  through 
thousands  of  years  from  slavery  to  where  they  are  to-day.  They 
are  not  going  back.  They  can  now  pick  up  a  telephone  and  have 
a  yeast  cake  delivered  to  them  in  ten  minutes.  Any  scheme  to 
educate  the  consumer  to  save  money  at  the  expense  of  trouble 
and  inconvenience  is  bound  to  fail."  ^ 

The  criticism  is  often  made,  and  probably  justly  made,  that 
we  have  entirely  too  many  retail  stores.     Some  careful  investi- 

^  Nystrom,  Paul  H.,  Economics  of  Retailing,  p.  357. 

^  Report  of  the  Growers  and  Shippers  Exchange,  Rochester,  N.  Y.,  U.  S. 
Dept.  of  Agriculture,  Report  No.  98,  1913,  p.  236. 

9  Dudley  B.  Pahner  in  the  Outlook,  March  14,  1917,  p.  460. 


150  MARKETING  AND  THE  MIDDLEMAN 

gators,  however,  say  that  the  burden  of  this  does  not  fall  on  the 
public,  but  on  the  retailer  hhnself.  In  other  words,  many  men 
accumulate  a  little  capital  in  other  walks  of  life,  go  into  retail 
trade,  and  fail.    One  writer  expresses  it  in  this  way: 

**In  conclusion  it  may  be  stated  that,  from  the  standpoint  of 
the  entire  public,  there  is  nothing  to  indicate  that  the  great  num- 
ber of  retail  stores  adds  anything  to  the  burden  of  expense  the 
consumer  must  bear.  The  high  failure-rate  in  the  retail  business 
would  seem  to  indicate  that  retail  distribution  is  supported,  in 
part  at  least,  not  by  the  consumers  who  patronize  the  stores,  but 
by  the  great  numbers  who  enter  the  business  of  retailing  with 
capital  accumulated  in  other  occupations,  and  then  lose  it  in  the 
retailing  venture.  The  losses  of  the  dealers  who  fail  are  primarily 
the  losses  of  the  dealers  themselves.  Only  in  the  most  general 
way  of  speaking  could  one  assert  that  the  public  must  bear  the 
burden.  Certainly,  no  extra  burden  is  added  to  the  prices  charged 
consumers  because  of  the  keenness  of  competition  resulting  from 
too  many  stores."  ^^ 

An  Ideal  Retailing  System. — Nystrom  pictures  for  us  an 
''ideal"  retailing  system.  Such  a  system,  says  he,  would  supply 
the  people  what  they  want,  the  way  they  want  it,  when  they  want 
it,  and  at  as  low  a  price  as  possible.  The  profits  should  be  fair, 
and  in  accordance  with  the  service  rendered.  And  more  than 
this,  the  salesman  must  be  able  to  render  an  expert  service.  Is  he 
a  groceryman?  Then  he  should  be  a  specialist  in  food  values,  in 
dietetics,  and  in  the  preparation  of  foods.  The  man  in  dry  goods 
should  be  a  textile  and  style  expert,  able  to  lecture  to  women's 
clubs  on  these  subjects.  The  rug  dealer  should  be  able  to  educate 
his  customers  in  the  intricate  lore  of  the  rug.  The  store  room 
and  store  equipment  must  be  up  to  the  highest  possible  standard 
of  cleanliness,  sanitation,  convenience,  and  artistic  and  archi- 
tectural arrangement.  Pure  fpod  laboratory  tests  (made  in  the 
store's  own  laboratory  or  in  one  supplied  by  the  municipality  or 
State)  should  protect  the  customer.  Public  regulation  is  now 
setting  standards  for  inspection  of  foods,  drugs,  stores,  restaurants, 
weights,  scales,  measures,  etc.  Untruthful  advertising  should 
come  under  State  control  next,  says  Nystrom. 

Retailers*  Conference. — In  Winnipeg  conferences  have  been 
held  by  wholesalers,  retailers,  and  bankers,  to  determine  what 
methods,  if  any,  could  improve  the  credit  conditions  of  merchandis- 
ing,  and  what  reforms,  if  any,  could  be  effected  in  wholesaling  and 

^°  Nystrom,  Paul  H.,  Economics  of  Retailing,  p.  335. 


MARKETING  COSTS  MONEY  151 

retailing.  The  consensus  was  that  the  retailers,  particularly  in 
the  country  towns,  are  needed  by  the  farmers,  and  hence  the  mail-, 
order  houses  of  the  city  should  not  supplant  them.  The  country 
town,  consisting  largely  of  retailers,  should  prosper  with  the 
farmers,  and  not  at  the  expense  of  the  farmer.  For,  of  course, 
the  farmer  knows  that  his  land  values  are  substantially  raised 
by  the  prosperity  and  growth  of  the  nearby  village.  The  retailers, 
in  the  Winnipeg  conference,  blamed  the  wholesalers  for  high 
prices,  claiming  that  the  wholesaler  would  not  sell  goods  to  them 
at  a  low  enough  rate.  The  answer  was  that  the  retailers  ought  to 
combine  in  cooperative  groups,  and  purchase  jointly  in  larger 
volume,  thus  enabling  the  wholesalers  to  do  business  on  smaller 
margins.  The  Conference  had  one  beneficial  effect,  namely,  to 
call  public  attention  to  the  problem  of  the  small  town  retailer. 

Marketing  Costs  Money. — One  important  lesson  which  many 
farmers  have  apparently  not  yet  learned  is  that  marketing  costs 
money,  and  is  worth  money.  Indeed  marketing  in  certain  products 
must  always  represent  a  large  margin  of  the  consumer's  cost. 
Where  farmers  have  successfully  organized  in  any  part  of  the 
United  States  and  done  their  own  marketing,  one  of  the  first  lessons 
they  have  learned  is  that  the  information  service  alone  has  cost 
them  a  large  amount  of  money.  Thus  the  produce  growers  in 
two  eastern  counties  of  Virginia  (Eastern  Shore  of  Virginia  Produce 
Exchange)  spend  as  much  as  twenty-five  thousand  dollars  a  year 
for  telegrams  and  telephone  service.  The  Orange  farmers  of 
California  (California  Fruit  Growers  Exchange)  spend  as  much  as 
seventy-five  thousand  dollars  a  year  for  telegraph  and  telephone 
service.  An  individual  buyer  of  potatoes  in  North  Dakota  spends 
seven  hundred  dollars  a  month  for  wire  service  during  the  busy 
season.  If  a  farmer  in  the  United  States  to-day  is  asked  to  name 
one  example  of  the  highest  possible  efficiency  in  marketing,  of 
marketing  conducted  on  the  lowest  margin  of  ''middleman's" 
expense,  he  would  probably  name  the  Ford  automobile.  This  is 
admittedly  an  example  of  a  business  which  has  been,  up  to  the 
present  writing  at  least,  conducted  with  an  idea  of  fair  service  to 
the  consumer.  And  yet  the  ''middleman's"  margin,  the  profit 
taken  by  the  retailer,  is  fifteen  per  cent.  The  so-called  "direct 
marketing"  is  not  encouraged  in  the  distribution  of  this  product. 
Indeed,  if  the  consumer  orders  his  car  direct  from  the  central  house 
in  Detroit,  he  pays  his  fifteen  per  cent  commission  j-ust  the  same. 
And  this  method  of  doing  business  has  had  two  results:  It  has 
caused  a  great  expansion  in  the  volume  of  the  business.     This 


152  MARKETING  AND  THE  MIDDLEMAN 

volume  of  business,  in  turn,  has  made  possible  improvements  in 
the  product,  a  lowering  of  price  to  consumers,  and  an  increase  in 
profits  to  the  manufacturer. 

Ford  Motor  Company. — A  person  connected  with  the  adver- 
tising department  of  the  Ford  Motor  Company  was  asked  to 
express  his  opinion  on  the  subject  of  marketing  costs.  This  he 
did  in  the  following  way: 

"The  fifteen  per  cent  allowed  to  the  agent  for  making  the  sale  carries 
with  it  the  certainty  of  considerable  gratuitous  service,  which  is  rendered  the 
owner  of  the  car,  not  only  at  the  time  of  the  purchase  but  during  the  years  that 
follow.  It  is  as  low  a  point  as  is  safe  or  consistent  with  good  reliable  business 
judgment.  For,  out  of  this  the  agent  must  maintain  his  place  of  business  up 
to  a  certain  standard  in  the  way  of  equipment  for  making  replacements  and 
repairs,  for  looking  after  the  welfare,  not  only  of  the  one  owner,  but  of  all  the 
owners  within  his  territory,  and  all  Ford  owners  who  may  drive  through  with 
their  cars  that  require  attention  and  service.  He  must  pay  his  overhead,  he 
must  pay  on  the  investment  in  his  business,  and  he  has  to  be  a  mighty  aggressive 
and  energetic  agent  if  he  makes  any  considerable  amount  of  money. 

"It  would  seem  to  us  there  is  a  broad  field  for  doing  very  valuable  work 
in  enhghtening  the  farmer  as  to  the  necessity  of  business  methods  and  business 
expenses.  The  primitive  way  will  not  do.  There  would  be  no  progress.  The 
reaping  machine  would  never  have  come  into  existence — the  farm  tractor, 
the  gang  plow,  the  automobile  and  all  the  advantages  of  modern  civiHzation 
and  progress  would  never  have  been  born — if  it  were  not  possible  to  develop  a 
saving  of  time  and  a  making  of  money  through  their  use  by  farmers.  All 
these  advances  that  have  come  from  the  brains  of  active  business  men  have 
been  for  the  benefit,  for  the  economy,  for  the  profit  of  the  farmer.  And  he 
should  be  the  one  to  welcome  them  most  eagerly  rather  than  to  be  picayune 
and  expect  any  man  to  do  business  for  his  interests  or  the  interests  of  anyone 
else  without  a  profit  .  .  .  The  laborer  is  worthy  of  his  hire,  and  nowhere 
else  more  worthy  than  in  being  that  connecting  link  which  brings  to  the  farmer 
those  larger  possibihties  for  making  money  and  clothing  himself  with  comforts 
and  luxuries.  One  trouble  with  the  farmer  is  that  he  does  not  place  any  value 
upon  time.  He  will  drive  milk  two  miles  to  a  milk  depot,  and  he  will  never 
estimate  the  cost  of  driving  it  from  his  house  to  the  depot  and  back  again.  It 
might  take  him  two  hours  with  a  team  of  horses  whose  labors  are  worth  $4.00 
per  day,  and  his  own  $2.00,  but  he  counts  it  no  cost." 

The  Farmer's  Middleman. — Farmers  favor  ''direct  marketing" 
as  an  ideal  system.  There  is  one  place  where  the  farmer's  theory 
of  direct  marketing  is  put  to  the  final  test,  and  that  is  in  the  so- 
called  ''sales"  or  "auctions"  held  by  farmers.  At  these  "sales," 
where  the  farmer  desires  to  dispose  of  his  goods  and  chattels  in 
quick  time  and  on  good  terms,  he  has  the  privilege  of  seUing 
"direct"  to  the  consumer.  Yet  I  have  never  known  a  farmer  to 
do  so.  In  practice  he  employs  an  expert  middleman,  known  as  an 
auctioneer,  to  sell  his  goods.  The  farmer  does  this  because  he 
saves  time  and  money  by  it.  The  consumer,  too,  saves  time  by  it, 
and  since  he  buys  the  goods  at  his  own  price,  he  cannot  object  to 
paying  for  the  services  of  this  middleman. 


d 


QUESTIONS  ON  THE  TEXT  153 

The  middleman  will  disappear  when  we  dispense  with  his 
services,  and  not  till  then. 

Since  ''direct  marketing"  is  an  ideal  which  can  never  be  real- 
ized in  its  entirety,  the  farmer's  opportunity  for  improving  his 
marketing,  permanently  and  economically,  seems  to  lie  in  the 
direction  of  owning  or  controlling  the  middleman,  not  in  eliminat- 
ing him.  This,  of  course,  signifies  a  high  degree  of  organization 
on  the  part  of  the  farmers,  coupled  with  standardization  of  product, 
so  that  a  group  of  farmers  in  one  section  can  deal  *'  direct"  (through 
their  proper  representative  agent,  a  "middleman")  with  an  organ- 
ized group  (through  its  representative)  in  some  other  section,  be 
the  group  farmers  or  city  consumers.  Progress  in  this  direction 
is  slowly  being  made.  With  the  coming  of  the  county  agent  in 
every  county,  and  with  a  fuller  development  of  the  present 
"Country  Life  Betterment"  movement,  the  farmers  will  be  in  a 
strong  position  for  marketing  their  products. 

Collective  Bargaining, — The  words  "collective  bargaining" 
have  come  into  general  use  as  signifying  the  dealings  between 
organized  laborers  and  capitalists  in  adjusting  wages  and  condi- 
tions of  employment.  It  is  held  to  be  legal  for  the  laborers  thus 
to  dispose  of  their  labor  collectively.  Collective  bargaining  is  just 
arriving  in  agriculture.  It  is  based  on  collective  action,  that  is, 
the  organization  of  a  group  of  farmers.  The  most  conspicuous 
examples  thus  far  in  agriculture  in  America  are  those  of  the  organ- 
ized dairymen  in  the  New  York  and  the  Chicago  districts,  fixing 
prices  with  distributors  by  means  of  the  collective  bargain.  The 
collective  bargain  has  also  been  used  by  organized  tenants  in  fixing 
rents;  by  organized  producers,  both  in  buying  supplies  and  in 
selling  farm  products;  the  collective  bargain  has  also  been  used 
by  farmers  in  fixing  the  wages  of  farm  labor. 

The  "elimination  of  the  middleman,"  so  far  as  such  a  thing  is 
feasible  and  desirable,  will  come  about  increasingly  through  the 
growth  of  collective  bargaining  in  agriculture.  This  growth  pre- 
supposes an  increase  in  real  cooperation,  that  is,  cooperation  which 
is  for  savings,  not  for  profits. 

QUESTIONS  ON  THE  TEXT 

1.  Show  the  four  underlying  problems  in  marketing.    When  did  the  States 

begin  marketing  activities?    Account  for  this  new  activity. 

2.  Show  in  detail  how  the  marketing  problem  was  attacked  by  each  of  the 

following  States:    Idaho,  Cahfornia,  Louisiana,  Michigan,  New  York, 
North  Carolina,  Ohio,  Pennsylvania,  Texas,  Washington. 

3.  Going  back  to  the  California  case,  what  principles  of  marketing  were 

finally  accepted  as  correct? 


154  MARKETING  AND  THE  MIDDLEMAN 

4.  Distinguish  between  temporary  makeshifts  and  fundamental  reforms. 

5.  Explain  in  detail  the  functions  of  the  so-called  "  Field  Agents  in  Marketing." 

6.  What  is  the  National  Association  of  State  Marketing  Officials? 

7.  Explain  at  length  the  functions  and  methods  of  the  United  States  Bureau 

of  Markets. 

8.  Show  the  success  and  the  Umitations  of  Parcel  Post  marketing. 

9.  Cite  facts  showing  the  costs  of  the  middleman,  i.e.,  the  so-called  "middle- 

man's toll,"  in  the  following:     wheat  and  flour;  meat;  butter;  eggs; 
potatoes;  tobacco;  citrus  fruits;  California  peaches,  raisins,  and  almonds. 

10.  Show  in  detail  the  risks  in  price  fluctuations,  citing  examples. 

11.  Show  risks  from  perishabihty. 

12.  Show  the  economic  functions  of  a  middleman. 

13.  Cite  the  experience  of  the  Growers  and  Shippers  Exchange  of  Rochester, 

N.  Y.,  and  show  what  principle  it  illustrates. 

14.  What  is  the  probable  solution  of  the  "middleman  problem"?    Will  the 

consumer  demand  more  or  fewer  services  from  the  middleman,  as  time 
goes  on? 

15.  Cite  Nystrom's  views  on  retailing. 

16.  State  briefly  the  outstanding  facts  on  the  Winnipeg  Conference  of  whole- 

salers, retailers,  and  bankers. 

17.  Cite  the  marketing  costs  involved  in  securing  market  information  by 

farmers'  organizations,  and  justify  this  expenditure. 

18.  What  marketing  principles  are  illustrated  by  the  distribution  methods 

of  the  Ford  Motor  Company? 

19.  Does  the  farmer's  use  of  the  auctioneer  illustrate  any  principle  in  marketing? 

20.  When,  if  ever,  will  the  middleman  disappear? 

21.  What  should  be  the  future  line  of  growth  in  market  reform?     Explain 

the  present  and  probable  future  field  of  the  collective  bargain. 

22.  Comment  on  the  Mail  Order  House  question ;  Butter  Marketing  at  Grand 

Rapids;  CaUfornia  Almond  Growers'  Brokerage  problem. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  To  what  extent  should  the  State  give  aid  to  farmers  in  marketing  their 

products? 

2.  To  what  extent  should  combines  among  farmers  be  legahzed? 

3.  How  should  the  selling  price  of  farm  products  be  determined  and  by  whom? 

4.  Formulate  an  ideal  system  of  storage,  transportation,  and  credit  for  farm 

products. 

REFERENCES 

1.  Brown,  Bliss  S.:    "Modern  Fruit  Marketing."    New  York,  1916. 

2.  FiLLEY,  H.  C:  "From  Cardoor  to  Consumer,"  Circular  No.  5,  Ne- 
braska Agricultural  Experiment  Station,  January  1,  1918. 

3.  FiTTS,  Edward  B.:  "Marketing  Hogs  in  Oregon."  Extension  Bulletin 
No.  214,  Oregon  Agricultural  College,  August,  1917. 

4.  Weld,  L.  D.  H.:  "The  Marketing  of  Farm  Products."  New  York, 
1916. 

5.  Holmes,  George  K.:  "Systems  of  Marketing  Farm  Products  and 
Demand  for  Such  Products  at  Trade  Centers."  Report  No.  98,  United  States 
Department  of  Agriculture.  Washington,  January,  1913.  Contains  accounts 
of  all  principal  cooperative  associations  in  the  United  States  in  1913. 

6.  Adams,  A.  B.:  "Marketing  Perishable  Farm  Products,"  Columbia 
University  studies,  Vol.  72,  No.  3,  1916.  ■ 

7.  Kerr,  W.  H.,  and  Weld,  L.  D.  H.:  "Prices  of  Wheat  to  Producers 
in  Kansas,"  etc.    63  Cong.  3  Sess.,  House  Doc.  1271,  Washington,  1914. 

8.  Huebner,  Grover:    "Agricultural  Commerce,  "New  York,  1915. 


REFERENCES  ^  155 

9.  Benjamin,  Earl  W.:  "Market  Egg  Problems,"  Bulletin  65,  Depart- 
ment of  Agriculture,  Albany,  1914,  368-385. 

10.  Myrick,  Herbert:    "How  to  Cooperate."    New  York,  1891. 

11.  NouRSE,  Edwin  Griswold:  "The  Chicago  Produce  Market,"  New 
York,  1918. 

12.  PoE,  Clarence:  "How  Farmers  Cooperate  and  Double  Profits," 
New  York,  1915. 

13.  Nystrom,  Paul  H.:    "The  Economics  of  RetaiHng,"  1915. 

14.  Bailey,  L.  H.  (Editor) :  "Cyclopedia  of  Agriculture,"  Vol.  4,  239-269. 

15.  American  Economic  Review,  IX,  No.  1,  March,  1919.  Papers  and 
Proceedings  of  35th  Annual  Meeting.  Effects  of  Government  Control  on 
Marketing  Methods  and  Costs:  Discussions  by  Hibbard,  Boyle  and  Smith, 
pp.  47-61.  Some  purposes  of  price  fixing  and  its  results:  G.  F.  Warren. 
233-246. 

16.  "Minnesota  Studies  in  Marketing  Farm  Produce,"  1915,  pp.  1-113. 
Discussion  of  following  subjects:  livestock;  potatoes;  poultry;  milk;  city 
market  of  Minneapohs;  grain;  food  supply  of  the  Iron  Range. 

17.  "National  Conference  on  Marketing  and  Farm  Credits,"  Chicago, 
1913;  1915;  1916. 

18.  "Industrial  Commission  Report,"  Vol.  VI,  5-297;  337-454,  1900, 
Vol.  IX,  xc-c,  1901;  Vol.  X,  ccxciii,  1901. 

19.  Yearbook  Department  of  Agriculture:  1899,  "Dairy  Development," 
381-403;  1900,  "Influence  of  Rye  on  the  Price  of  Wheat,"  167-183;  1901, 
"Wheat  Ports  of  the  Pacific  Coast,"  567-581;  1902,  "Distribution  and  Magni- 
tude of  Poultry  and  Egg  Industry,"  295-309;  1904,  "Consumers'  Fancies," 
417-435;  1909,  "Methods  and  Costs  of  Marketing,"  161-173;  1910,  "Effect  of 
Present  Method  of  Handhng  Eggs  on  the  Industry  and  the  Product,"  461-477; 

1911,  "Handhng  and  Marketing  of  Eggs,"  467-479;  1911,  "Reduction  of 
Waste  in  Marketing,"  165-176;  1912,  Corbett,  L.  C:  "A  Successful  Method 
of  Marketing  Vegetable  Products,"  353-363;  1912,  Pierce,  H.  C:  "How  the 
Produce  Dealer  May  Improve  the  Quahty  of  Poultry  and  Eggs,"  345-353; 

1912,  Pennington,  M.  E.:  "The  Handhng  of  Dressed  Poultry  One  Thousand 
Miles  from  the  Market,"  285-293;  1915,  Wilcox,  E.  V.:  "How  Hawaii  Helps 
the  Farmers  Market  their  Produce,"  131-146;  1915,  Clark,  E.  D.:  "Shipping 
Fish  Three  Thousand  Miles,"  155-158;  1915,  Wolfe,  Stanley  L.:  "Pointers 
on  Marketing  Woodlot  Products,"  121-130;  1918,  Folger,  J.  C:  "The  Com- 
mercial Apple  Industry  of  the  United  States,"  367-379. 

20.  Butler,  Ralph  Starr:  "Marketing  Methods"  (Vol.  5,  Modern 
Business,  Alexander  Hamilton  Institute,  New  York,  1917),  pp.  1-140;  206- 
225;  322-335. 

21.  Swinney,  John  B.:  "Merchandising"  (Vol.  19,  Modern  Business, 
Alexander  Hamilton  Institute,  New  York,  1917),  pp.  298-348. 

22.  On  Milk  Marketing. — Files  of  official  organs  of  organized  milk  pro- 
ducers, as  follows:  (a)  Dairymen's  League  News  (Watertown,  New  York); 
(6)  Oregon  League  Dairyman  (Portland,  Oregon);  (c)  The  Milk  News  (Chi- 
cago) ;  (d)  Dairymen's  Price  Reporter  (Youngstown,  Ohio) ;  (c)  New  England 
Dairyman  (Boston).  Independent  paper:  The  Milk  Reporter  (Suffolk,  New 
Jersey).  Also  following  sources — Babcock,  H.  E.  :  " The  Dairymen's  League," 
Cornell  Countryman,  March,  1919;  National  Milk  Producers  Federation 
(By-laws),  "Marketing  and  Farm  Credits  Conference,"  Chicago,  1916,  430- 
432;  Cavert,  W^.  L.:  "Milk  Distribution  in  Minneapolis  and  St.  Paul,"  yni. 
of  Minn.  Studies  in  the  Marketing  of  Farm  Products,  No.  4,  Feb.,  1915,  73-87; 
HoRToN,  H.  E.:  "Marketing  Whole  Milk,  Marketing  and  Farm  Credits 
Conference,"  Chicago.  1916,  401-409;  Bush,  Gwendell:  "New  York  Milk 
Fight"  (same  volume),  409-418;  Kirkpatrick,  K.  A.:  "Marketing  Milk  in 
the  Twin  Cities"  (same  volume),  418-421;  Milk  Producers  Federation  (same 
volume),  421-425;  Wheeler,  Wilfred:    "Marketing  Milk  in  New  England, 


156  MARKETING  AND  THE  MIDDLEMAN 

Marketing  and  Farm  Credits  Conference,"  Chicago,  1915,  141-151;  Kittle, 
W.  J.:  "Distribution  of  Whole  Milk  in  Chicago"  (same  volume),  152-158; 
Chicago  Milk  Producers  Association ;  "  Marketing  and  Farm  Credits  Confer- 
ence,'^ Chicago,  1913,  128-131;  Report  of  Fair  Price  Milk  Committee  of  the 
City  of  New  York  and  the  Commission  on  High  Cost  of  Living,"  Legislative 
Document  No.  29,  New  York,  1920;  "Primary  Report  of  Joint  Committee  on 
Dairy  Products,  Livestock  and  Poultry,"  1917  (So-called  Wicks  Report, 
Albany,  N.  Y.);  "Development  of  the  Cooperative  Associations  Controlling 
Dairy  Production  in  the  United  States  from  1906  to  1916,"  Hoard's  Dairy- 
man, Nov.  3,  1916.  (Same,  reviewed  in  International  Review  of  Agricultural 
Economics,  Feb.,  1917,  37-39);  Abbott,  Stanley  H.:  "Experience  of  the 
Boston  Cooperative  Milk  Producers  Company  with  the  Sherman  Anti-Trust 
Act,  Bulletin  35,  Dept.  of  Ag.,  Albany,  1912, 1127-1133;  "Report  of  Governors' 
Tri-State  Milk  Commission  to  Governors  of  Pennsylvania,  Maryland,  Dela- 
ware," 1917. 

Also  followmg  publications  of  milk  product  companies:  "The  Powder 
Magazine,  Syracuse,  N.  Y.,  Published  by  Merrell-Soule  Co.  Also:  "The  Milk 
Dealer,"  Milwaukee,  Wisconsin,  The  National  Journal  for  the  city  milk  trade: 
official  organ  of  the  International  Milk  Dealers  Association,  and  the  Minne- 
sota Milk  Dealers  Association. 

Also  following  miscellaneous — Warber,  G.  P.:  "A  Study  of  Prices  and 
Quahty  of  Creamery  Butter,"  Bulletin  682,  U.  S.  D.  A.,  July,  1918;  Potts, 
Roy  C,  and  Meyer,  H.  F.:  "Marketing  Creamery  Butter,"  Bulletin  456, 
U.  S.  D.  A.,  1917;  Potts,  Roy  C:  "Marketing  Practices  of  Wisconsin  and 
Minnesota  Creameries,"  Bulletin  690,  U.  S.  D.  A.,  1918;  Macklin,  Theodore  ; 
"The  Marketing  of  Kansas  Butter,"  Bulletin  216,  Kans.  Ag.  Ex.  Sta.,  1917; 
Larkin,  M.  Lippit:  "The  Butter  Market,"  Journal  of  Political  Economy, 
Marchj  1912,  267-274;  "Butter  Prices  from  Producer  to  Consumer,"  Bulletm 
164,  Bureau  of  Labor  Statistics,  Washington,  1914;  Hibbard,  B.  H.,  and 
Erdman,  H.  E.:  "Marketing  Wisconsin  Milk,"  Bulletin  285,  Wise.  Ag.  Exp. 
Sta.,  1917;  Taylor,  H.  C,  Schoenfeld,  W.  A.,  and  Wehrwein,  G.  S.:  "The 
Marketing  of  Wisconsin  Cheese,"  Bulletin  231,  Wise.  Ag.  Exp.  Sta.,  1913; 
"Investigation  and  Analysis  of  the  Production,  Transportation,  Inspection, 
and  Distribution  of  Milk  and  Cream  in  New  England,"  prepared  by  the  Boston 
Chamber  of  Commerce,  Bulletin  22,  Department  of  Ag.  of  Vermont,  St. 
Albans,  July,  1915;  "British  National  Milk  Policy,"  Hoard's  Dair3rman,  Feb. 
6,  1920,  126;  "Cooperative  Dairymen  in  Vancouver,"  Grain  Grower's  Guide, 
Oct.  22,  1919,  8;  Holman,  Chas.:  "Ohio  Milk  Producers  Jailed,"  American 
Cooperative  Journal,  Sept.,  1919;  "Detroit  Milk  Situation,"  Michigan  Farmer, 
Dec.  8,  1917;  Hedrick,  W.  O.,  and  Anderson,  A.  C:  "The  Detroit  Commis- 
sion Plan  of  City  Milk  Administration,"  Special  Bulletin  99,  Michigan  Ag. 
CoUege,  1919. 

APPENDIX 

The  Mail  Order  House. — The  mail  order  house  is  an  agricultural  problem 
for  two  somewhat  incongruous  reasons.  In  the  first  place  the  big  honest  mail 
Drder  house  renders  the  farmer  a  big  service  by  bringing  to  his  mailbox  or  to 
his  nearest  freight  depot,  a  standard  set  of  goods  at  a  fair  cash  price.  It  also, 
however,  by  this  same  service,  is  a  competitor  of  the  nearby  village  merchants, 
and  this  competition  may  sap  the  life  of  the  country  town.  And  the  country 
town  is  the  one  strong  element  in  raising  land  values,  bringing  to  the  isolated 
farmer  the  services  of  doctors,  dentists,  bankers,  merchants,  and  others,  and 
adding  in  innumerable  ways  to  the  fullness  of  farm  Hfe. 

This  is  not  the  proper  place  to  enter  into  a  prolonged  discussion  of  the 
merits  and  demerits  of  a  mail  order  house.  There  is  one  way,  at  least,  to 
meet  the  situation,  fair  to  both  sides.  It  is  illustrated  by  the  case  of  the  house- 
wife who  made  out  her  grocery  order,  amounting  to  $50.12,  from  the  latest 


APPENDIX  157 

price  list  of  a  great  mail  order  house.  She  took  this  list  to  the  local  grocer  who 
studied  it  carefully  and  then  either  dupHcated  or  improved  upon  every  item 
hsted  thereon,  and  filled  the  order  for  $48.12  in  cash.  He  met  the  mail  order 
problem  successfully. 

"  Eliminating  the  Middleman." — (Address  by  W.  B.  Liverance,  before  the 
20th  Convention  of  National  Creamery  Buttermakers  Association,  Milwaukee, 
1917.)  Speaking  of  the  recent  federation  of  cooperative  creameries  near 
Grand  Rapids,  Michigan,  Mr.  Liverance  said: 

"The  one  great  idea  in  organizing  our  association  was,  by  combining  the 
output  of  our  creameries  and  by  improving  the  quahty,  to  secure  better 
markets  for  our  butter.  We,  at  the  outset,  had  many  wild  theories  of  distrib- 
uting butter  direct  to  the  consumer,  of  perfecting  a  marketing  system  in  many 
of  the  large  cities,  of  eliminating  the  middleman  completely,  etc.  We  were 
in  the  class  of  many  of  the  impractical  theorists  of  to-day.  We  worked  out 
schemes  of  house-to-house  disposal  of  butter,  of  distributing  butter  direct 
from  the  creamery  to  the  retailer,  and  many  others  of  similar  nature.  It 
took  us  a  year  or  better  to  reahze  that  it  takes  money  to  market  butter  ..." 

Cutting  Out  the  Middlemen,  or  SeUing  Through  the  Middlemen. — (The 
experience  of  the  Cahfornia  Almond  Growers  Exchange,  1918  report,  p.  12.) 
"The  Eastern  broker  received  23^  per  cent  for  his  services,  which  consist  of 
the  following:  SoUciting  orders  from  customers;  forwarding  them  to  the 
Exchange;  telegraphing  when  necessary;  and  unloading  and  distributing  our 
cars  on  arrival.  Two  and  one-haK  per  cent  is  a  very  reasonable  brokerage 
for  the  service  rendered." 


CHAPTER  X 

COOPERATION 

"Cooperation'^  in  agriculture  is  one  of  those  vague  things 
which  every  writer,  speaker,  and  politician  usually  endorses.  The 
word  has  come  to  be  used  very  loosely.  It  needs  defining.  The 
word  is  now  used  in  a  broad  and  in  a  narrow  sense.  It  is  well  at 
this  point  to  inquire  into  both  the  broader  and  the  narrower  use 
of  the  term. 

In  the  Broader  Sense. — Cooperation  is  the  term  often  used  to 
designate  the  working  together  for  mutual  benefit  of  the  farmers, 
on  the  one  hand,  and  the  commercial  clubs  of  the  town,  the 
bankers,  the  railroads,  the  big  industries,  etc.,  on  the  other  hand. 
And,  in  the  broader  sense,  this  is  true  cooperation.  This  meaning 
can  easily  be  illustrated. 

For  instance,  the  Binghamton  Chamber  of  Commerce  (of 
Binghamton,  Broome  County,  New  York)  was  among  the  first, 
if  not  the  very  first,  to  organize  what  is  now  known  as  a  Farm 
Bureau.  When  organized  and  financed,  the  Bureau  represented 
the  Chamber  of  Commerce,  the  Delaware,  Lackawanna  &  Western 
Railroad  Company,  and  the  United  States  Department  of  Agri- 
culture. The  city  of  Binghamton  and  the  railroad  company  both 
frankly  recognized  that  their  welfare  depended  fundamentally  on 
the  agriculture  of  the  community.  The  Chamber  of  Commerce 
stated  the  case  plainly  to  the  farmers,  and  secured  their  endorse- 
ment, on  the  grounds  that  they  would  either  all  prosper  together 
or  all  suffer  together.  A  county  agricultural  agent — a  genuine 
community  farm  expert — was  employed.  The  Farm  Bureau 
department  of  the  Chamber  of  Commerce  proved  a  success  far 
greater  than  its  organizers  had  hoped.  Since  its  beginning  in 
1911  this  broad  experiment  in  cooperation  of  town  and  country 
has  been  an  example  for  other  towns  to  follow. 

A  second  example  of  cooperation  in  this  broader  sense  is  that 
of  the  bankers  of  the  State  of  Alabama  with  the  farmers  of  that 
section.  Alabama  has  produced  one  of  the  greatest  agricultural 
leaders  of  the  day  in  the  person  of  Mrs.  G.  H.  Mathis  (Fig.  23), 
an  actual  farmer.  She  advised  the  bankers  to  take  more  interest 
in  the  farmer  and  less  interest  from  him,  to  encourage  the  land- 
lords to  establish  friendly  and  helpful  relations  with  their  tenants 
158 


IN  THE  BROADER  SENSE 


159 


to  the  end  that  the  tenants,  through  better  farm  management, 
might  become  land  owners.  The  Alabama  bankers  employed 
Mrs.  Mathis  to  give  up  part  of  her  time  to  teach  better  farming 
to  the  farmers  of  the  State,  including  the  landlords  and  the  tenants, 
and  also  the  boys  and  girls  of  the  farms.  And  hence  Mrs.  Mathis, 
by  working  with  the  bankers  and  farmers,  with  the  landlords  and 
tenants,  is  securing  the  harmonious  working  together  of  these 
different  interests,  and  each  interest  is  benefited  by  this  coopera- 
tion. The  bankers  in  other  states  are  very  active  both  as  State 
Bankers  Associations  and  as  in- 
dividual bankers,  in  cooperating 
with  the  farmer.  The  "Banker- 
Farmer"  is  the  official  organ  of 
this  broad  form  of  cooperation.^ 

The  cooperation  of  railroads 
with  farmers  takes  many  forms. 
All  important  railroads  now  main- 
tain agricultural  departments 
whose  chief  aims  are  to  improve 
agriculture  in  the  territory  tra- 
versed by  the  road.  New  plants, 
new  methods  of  cultivation,  bet- 
ter seed  selection,  rotation  plans, 
better  grades  of  livestock,  bet- 
ter marketing  methods — all 
these  things  and  many  more  re- 
ceive attention.  The  late  James 
J.  Hill,  when  president  of  the 
Great  Northern  Railway,  improved  the  breed  of  beef  cattle  along 
his  lines  in  North  Dakota  by  awarding  very  expensive  pure-bred 
sires  free  of  cost  to  farmers  meeting  certain  requirements.  Thus, 
railroads  in  general,  with  a  purpose  which  they  frankly  confess  to 
be  selfish,  aim  to  improve  the  particular  type  of  agriculture  which  is 
peculiar  to  their  section.  The  Missouri,  Kansas,  and  Texas  Rail- 
way, for  instance,  like  other  roads  in  the  fruit  belt,  is  educating 
the  farmer  to  grade  and  pack  his  produce  in  a  standard  marketable 
container.  Special  trains  are  sent  by  many  roads,  carrying  exhibits 
of  poultry  or  livestock  or  pure  seeds  or  other  demonstration 
material,  accompanied  by  able  lecturers  and  demonstrators,  to  carry 
the  gospel  of  scientific  agriculture  to  the  farmer.  And  in  numerous 
other  ways  railroads  are  cooperating  with  the  farmers. 

1  The  "Banker-Farmer"  is  published  at  Champaign,  lUinois. 


Fig.  23.— Mrs.  G.  H.  Mathis,  of  Alabama. 


160  COOPERATION 

The  great  industrial  corporations  likewise  cooperate  widely 
with  the  agricultural  industry.  The  International  Harvester 
Company,  Deere  and  Company,  the  Universal  Portland  Cement 
Company,  and  many  other  large  concerns  now  conduct  experi- 
mental farms,  maintain  agricultural  departments,,  issue  literature, 
furnish  speakers,  and  in  many  other  ways  cooperate  with  the 
farmer  in  bettering  his  financial  condition. 

In  the  same  broad  sense  of  the  term  cooperation,  the  State  and 
federal  governments  cooperate  with  the  farmer,  through  the  Experi- 
men+  Station,  Agricultural  Colleges,  Departments  of  Agriculture, 
the  Federal  Bureau  of  Markets,  and  numerous  other  agencies. 

Cooperation;  in  Narrow  Sense. — As  used  in  a  narrower  sense, 
cooperation  means  that  form  of  business  organization  among 
farmers  whose  primary  aim  is  savings  and  net  profits.  To  carry 
out  this  aim  our  States  have  very  generally  enacted  laws  providing 
for  the  incorporation  of  farmers'  cooperative  associations.  These 
cooperative  corporations,  while  all  aiming  at  economies  and 
elimination  of  wastes,  rather  than  at  profits,  fall  into  two  general 
classes:  those  with  capital  stock  and  those  without  capital  stock. 
The  majority  of  States  provide  only  for  the  capital  stock  type  of 
organization.  A  few  States  provide  for  both  forms.  In  either 
event,  the  true  cooperative  corporation  must  meet  with  one  test, 
namely,  its  ''earnings"  (more  correctly  its  savings)  must  be  dis- 
tributed to  those  whose  business  produces  these  earnings,  and  in 
some  fair  proportion  to  the  business  done.  In  other  words,  in 
case  the  cooperative  corporation  has  capital  stock,  only  a  fair 
interest  rate  must  be  paid  to  stock  in  the  form  of  dividends  (usually 
from  6  to  8  per  cent),  and  the  balance  of  the  net  earnings,  if  any, 
to  those  patrons  whose  business  produced  the  earnings.  It  has 
been  customary,  in  many  quarters,  to  lay  down  three  hard-and- 
fast  rules  or  "essentials"  for  pure  cooperation,  namely:  (1)  One 
vote  for  one  member  regardless  of  the  amount  of  stock  held.  This 
is  known  as  the  one-man-one-vote  rule.  (2)  Distribution  of  earn- 
ings: dividends  on  capital  stock  limited  to  fair  interest  rate; 
patronage  dividends  on  basis  of  business  done  by  individual. 
This  is  known  as  the  patronage  dividend  rule.  (3)  Limitations 
on  shareholding :  limited  to  real  farmers ;  limited  as  to  amount  any 
one  person  can  hold,  such  as,  for  instance,  $1000  per  person.  If 
these  rules  are  construed  strictly,  then  the  United  States  affords 
but  very  few  examples  of  successful  cooperation.  In  almost  every 
conspicuous  case  of  success  one  or  more  of  these  elements  is  lacking. 
The  real  test  is,  who  shares  the  benefits?    If  the  benefits  (whether 


PURPOSE  OF  COOPERATION  161 

in  the  form  of  stock  dividends,  patronage  dividends,  or  other 
form)  accrue  to  those  who  own  the  capital  stock,  and  not  also  to 
those  who  furnish  the  business,  then  the  concern  is  not  coopera- 
tive, and  if  these  benefits  do  go  to  those  who  produce  the 
business,  then  the  business  is  cooperative,  whether  the  other 
''essentials,"  so  called,  are  adhered  to  or  not.  The  three  best 
examples  of  large  and  successful  cooperation  in  agriculture  in 
North  America  are  the  United  Grain  Growers  of  Winnipeg, 
the  California  Fruit  Growers  Exchange  of  Los  Angeles,  and 
the  Eastern  Shore  of  Virginia  Produce  Exchange  of  Onley, 
Virginia.  None  of  these  adheres  strictly  to  the  three  ''rules"  of 
cooperation  named  above. 

A  large  number  of  farmers'  corporations  which  call  themselves 
cooperative  have  none  of  the  elements  of  cooperation  about  them, 
and  hence  are  not  entitled  to  that  name.  And  many  corporations 
which  begin  as  true  cooperatives  permit  all  their  stock  to  drift 
into  the  hands  of  two  or  three  individuals.  Such  an  institution 
is  not  likely  to  remain  long  as  a  truly  cooperative  organization, 
whatever  the  name  it  may  bear. 

Purpose  of  Cooperation. — Cooperation,  it  must  be  emphasized, 
is  for  savings,  not  for  profits.  "Capitalistic"  corporations,  so 
called,  are  organized  for  profits,  and  for  profits  only.  But  coopera- 
tive corporations  are  organized  to  perform  a  service  for  their  mem- 
bers, and  this  service  usually  takes  the  form  of  economic  savings. 
It  is  not  therefore  in  accord  with  the  spirit  of  true  cooperation 
to  organize  for  the  purpose  of  making  profits  from  non-members. 
Since  we  now  have  30,000,000  persons  on  farms  and  70,000,000 
persons  not  living  on  farms,  it  is  evident  that  the  consumer  must 
be  reckoned  with  in  forming  any  cooperative  "combine."  Other- 
wise the  courts  will  hold  such  a  combine  to  be  contrary  to  public 
policy.  In  brief,  cooperation  in  agriculture  aims  to  eliminate 
wastes,  introduce  improvements,  and  hence  realize  savings  in  the 
various  processes  of  production,  marketing,  buying,  insurance, 
credit,  etc.  Increased  profits  have  not  been  taken  out  of  the  con- 
sumer. The  consumer  is,  rather,  a  beneficiary.  Yet  savings  have 
accrued  to  the  farmer.  Mention  has  already  been  made  in  this 
work  of  the  California  Orange  Growers,  and  how,  by  organizing 
the  California  Fruit  Growers  Exchange  and  advertising  the  "Sun- 
kist"  brand  of  citrus  fruits,  they  have  been  enabled  to  furnish  the 
consumer  a  bigger,  better,  and  cheaper  orange,  with  increased 
profits  to  themselves.  But  these  profits  have  accrued  through 
savings  effected  and  wastes  eliminated. 
11 


162 


COOPERATION 


An  Example  of  Cooperation. — An  example  of  successful  cooper- 
ation is  found  among  the  farmers  of  Kentucky.  The  farmers  of 
Warren  County,  in  the  territory  adjacent  to  Bowling  Green,  have 
been  able  to  bring  to  perfection  a  certain  variety  of  strawberry 
known  as  the  Aroma.  But  the  marketing  of  this  highly  perishable 
fruit  proved  a  task  beyond  the  powers  of  the  ordinary  farmer, 
and  hence  under  wise  leadership  the  growers  associated  them- 
selves together,  and  in  1909  incorporated  the  Warren  County 
Strawberry  Growers'  Association,  a  cooperative  corporation.  This 
section  of  the  Blue  Grass  State  now  has  the  reputation  of  being 


Fia.  24. — Wunt-n  County,  Kentucky  iStittwljeriy  Abttociutiun,  jjickiiiK  the  Ixiiriea.  (U.S.  D.  A.) 

the  largest  strawberry  growing  and  shipping  point  in  the  world. 
The  fruit  is  shipped  in  attractively  labeled  crates.  For  the  1917 
crop  ninety  carloads  of  crate  material  was  contracted  for  in 
advance.  The  railroad  cooperated  by  building  additional  loading 
sheds  and  new  trackage,  and  by  running  special  strawberry  trains 
of  ten  cars  or  more,  to  the  northern  markets,  on  regular  passenger 
train  time.  The  marketing  of  the  berries  is  done  by  the  Growers' 
Association,  in  charge  of  an  efficient  manager  (Figs.  24  and  25). 

The  important  link  in  the  chain  is  the  Inspection  Service.  All 
of  the  fruit  put  out  by  the  association  is  inspected  before  loading, 
and  is  put  up  in  three  distinct  grades.  The  association  has  adopted 
a  very  stringent  code  of  rules  on  the  grading  of  the  fruit.  By  thus 
standardizing  their  product  and  truthfully  labeling  it  they  are 
able  to  sell  this  vast  cjuantity  of  perishable  stuff  by  wire  on  the 


THIS  KENTUCKY  EXAMPLE  OF  COOPERATION 


163 


f.o.b.  basis.  It  may  be  added  also  that  money  is  freely  spent  in 
April  and  the  early  part  of  May  in  advertising  widely  these  Ken- 
tucky strawberries.  Dealers  are  informed  by  advertisements  in 
the  trade  papers,  and  the  market  demand  is  properly  cultivated  by 
the  time  the  heavy  car-lot  movement  of  strawberries  begins. 

This  Kentucky  example  of  cooperation — carried  out  where  the 
farmers  are  rated  as  particularly  individualistic — illustrates  well 
certain  correct  principles  and  practices  in  cooperation.  First, 
there  is  a  specialized  field  where  the  need  of  cooperation  is  great. 
A  highly  centralized  organization  is  effected  under  wise  leadership, 


Fia.  25. — Grading  and  packing  the  berries  for  the  northern  market.  (U.  S.  D.  A.) 

with  no  money  worse  than  wasted  in  promoter's  fees.  (As  coopera- 
tion becomes  more  popular,  more  and  more  counterfeit  and  bogus 
"cooperators''  will  rush  in  and  organize  farmers  for  the  twenty 
per  cent  commission,  more  or  less,  which  they  can  extract  for  their 
*' services.")  The  product  was  standardized.  That  is,  a  certain 
distinct  variety  and  quality  was  developed  and  properly  labeled. 
This  served  as  did  the  trademarks  developed  by  some  of  our  old, 
reliable,  honorable  business  firms.  Cooperation  in  this  form  brings 
savings  to  the  producers  through  doing  business  on  a  large 
scale,  and  at  the  same  time  gives  the  consumer  part  of  the 
])enefits  in  the  form  of  an  improved  product  at  a  lower  price,  as 
happened  in  the  case  of  the  California  oranges.  In  both  cases 
the  wider  distribution  of  a  highly  perishable  product  was  the 
underlying  problem. 


164 


COOPERATION 


Some  Causes  of  Failure. — The  strawberry  growers  and  orange 
growers  have  shown  us  some  of  the  correct  principles  and  practices 
of  cooperation.  Other  experiments  have  shown  us  the  wrong 
principles  and  practices.  The  death-rate  of  cooperative  enter- 
prises in  America  is  entirely  too  high.  First  in  the  list  of  failures 
come  the  cooperative  stores.  Most  of  these  institutions  have  been 
failures.  Successes  have  been  too  few  to  point  out  the  road  to 
success.  The  farmers'  cooperative  elevator,  on  the  other  hand, 
seems  to  have  run  the  gamut  of  failure,  near  failure,  fair  success 
and  success.    The  causes  of  failure  in  the  farmers'  elevators  that 


Fig.  26. — Country  elevator  owned  by  the  United  Grain  Growers.     This  company  operates 

350  elevators  like  this. 


have  gone  down  may  be  reduced  to  four  general  weaknesses:  (1) 
Poor  management,  including  lack  of  accounting  and  auditing;  (2) 
Competition;  (3)  Emigration  of  original  stockholders;  (4)  Dis- 
loyalty of  stockholders.  But  these  failures  of  the  past  have  become 
stepping  stones  to  success  for  the  present  and  future.  The  cooper- 
ative packing  house  is  now  on  trial  in  the  United  States.  A  con- 
spicuous failure  in  this  field  occurred  at  La  Crosse,  Wisconsin. 
But  here  promotion  fees  were  too  high  for  any  corporation  to 
stand.  Many  bogus  ''cooperative"  enterprises  have  come  to 
disgrace  and  failure,  thus  casting  a  shadow  on  efforts  at  genuine 
cooperation.  Thus,  the  so-called  Northwest  Trading  Company, 
operating  in  the  State  of  Washington  chiefly,  and  masquerading 
as  a  farmers'  concern  to  ''eliminate  the  middlemen,"  fell  into  the 


I 


UNITED  GRAIN  GROWERS 


165 


hands  of  the  federal  courts,  and  its  leaders  were  convicted  of 
criminal  practices  and  imprisoned. 

United  Grain  Growers. — The  largest  example  of  cooperation 
among  farmers  in  North  America  is  that  of  the  grain  growers  of 
western  Canada.  The  United  Grain  Growers,  as  their  company  is 
called,  has  an  annual  turnover  of  well  over  a  hundred  million 
dollars.  This  company,  like  all  successful  cooperatives,  was  the 
child  of  necessity.     Beginning  in  1906  under  farmer  leadership, 


Fig.  27. — Terminal   elevator,    2,.3UU,U(MI    bii>liels   capacity.      Operated    l)y    l  (         :; 

Growers  at  Fort  William,  on  Lake  Superior. 

purely  as  a  farmers'  economic  movement  for  the  better  and  cheaper 
handling  of  western  grain,  the  company  has  now  developed  several 
collateral  lines  of  activity.  The  business  of  the  Company,  briefly 
stated,  is  now  as  follows:  (1)  Grain  commission  department  for 
selling  the  grain;  (2)  Country  elevator  department  which  operated 
343  country  grain  elevators  (Fig.  26),  231  flour  warehouses,  and 
181  coal  sheds;  (3)  Livestock  department,  for  selling  livestock: 
(4)  Terminal  elevator  department,  operating  both  owned  and 
leased  terminal  elevators  and  a  hospital  elevator  '(Fig.  27) ;  (5) 
Cooperative  supply  department,  for  buying  farm  machinery  and 
other  supplies  (Figs.  28  and  29) ;  (6)  Export  company,  for  hand- 


166 


COOPERATION 


^  9 
.-a 

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S-i      _ 


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T3  S 

q  3 


CO    O 

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O    QQ 

2i  w 


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UNITED  GRAIN  GROWERS 


167 


ling  the  grain  export  business;  (7)  Public  Press,  Limited — a 
printing  company  to  print  the  official  organ,  ''The  Grain  Growers' 
Guide,"  catalogs,  educational  and  propaganda  Uterature;  (8) 
Sawmills  and  timber  lands  in  British  Columbia;  (9)  Land  depart- 
ment, for  selling  farm  land  on  a  commission  basis,  offering 
protection  and  service  to  both  buyer  and  seller. 


Fig.  29. — Winnipeg  machinery  showroom.s  of  the  United  Grain  Growers. 


In  its  form  of  organization  this  company  is  highly  centralized, 
and  is  therefore  efficient.  This  centralization  may  be  represented 
in  this  form: 


when 


then 


40  farmers. 

6000  acres  in  grain. 

$8000  of  stock  subscribed  in  the  United  Grain  Growers. 

United  Grain  Growers  will  erect  a  30,000  bushel  house  (or 
larger),  equipped  with  cleaning  machinery.  Farmers 
will  own  stock  in  the  big  central  corporation — not  in 
a  local  company. 


This  company  has  now  35,000  shareholders,  a  paid-up  capital 
of  $2,159,763.16,  and  a  reserve  fund  of  $1,600,000.  Shares  of  stock 
have  a  par  value  of  $25,  and  a  book  value  of  $41.50.    When  first 


168 


COOPERATION 


organized,  under  a  Manitoba  charter,  shareholding  was  hmited 
to  4  shares  to  one  person.  Under  the  present  Dominion  charter, 
the  hmit  is  80  shares  to  one  person. 

The  one-man-one-vote  rule  prevails.  No  proxy  voting  is 
allowed.  No  patronage  dividends  have  thus  far  been  paid,  surplus 
earnings  going  into  reserves  and  into  developing  collateral  activi- 
ties. Patronage  dividends  on  purchases  are  now  under  considera- 
tion. Patronage  dividends  on  grain  sold  are  forbidden  by  the 
anti-rebate  rule  of  the  Winnipeg  Grain  Exchange,  of  which  this 

Company  is  a  member. 

The  United  Grain  Growers  is 
an  amalgamation  of  two  central- 
ized farmers'  companies,  the  Grain 
Growers  Grain  Company  (organ- 
ized in  1906  and  operating  chiefly 
in  Manitoba  and  Saskatchewan), 
and  the  Alberta  Farmers'  Co- 
operative Elevator  Company 
(organized  in  1914,  and  operating 
in  Alberta).  The  amalgamation 
was  effected  in  1917.  A  Board 
of  12  directors,  all  farmers,  man- 
age this  huge  enterprise.  The 
same  president,  T.  A.  Crerar,  has 
been  kept  in  power  since  1901 
(Fig.  30).  The  annual  meeting  of 
stockholders  is  a  delegate  body, 
the  locals  being  represented  by 
duly  chosen  delegates.  The 
company  pays  the  expenses  of  the  delegates  to  insure  democracy 
in  representation. 

The  reader  will  bear  in  mind  that  many  farmers  in  the  province 
of  Saskatchewan  are  members  of  the  Saskatchewan' Cooperative 
Elevator  Company — a  company  competing  with  the  United  Grain 
Growers — having  a  business  very  similar  to  that  of  the  Winnipeg 
company,  and  having  seats  in  both  the  Winnipeg  and  Minne- 
apolis grain  exchanges.  These  two  companies  have  given  the 
farmers  a  powerful  voice  in  controlling  the  grain  trade  of  the  three 
prairie  provinces. 

Success  of  Cooperation. — ^The  friends  of  cooperation  are  satis- 
fied that  the  movement  is  slowly  winning  success.  In  comparison 
with  Europe,  this  success,  to  be  sure,  is  small.    But  Europe  presents 


Fig.  30.— President  T.  A.  Crerar,  United 
Grain  Growers,  Ltd.,  Winnipeg. 


IN  SELLING 


169 


three  very  important  differences  in  the  environment  of  coopera- 
tion: (1)  In  Europe  farmers  Uve  by  the  graves  of  their  ancestors, 
while  in  the  United  States  many  neighbors  come  and  go  with  each 
passing  year;  (2)  In  Europe  a  cooperative  community  enjoys 
unity  of  race,  religion  and  language,  whereas  the  average  American 
community  has  not  unity  of  race,  language,  or  religion;  (3)  Dire 


Fig.  31. — Eastern  Shore  of  Virginia  Produce  Exchange,  Onley,  Virginia. 

necessity  among  the  peasants  of  Europe  have  driven  them  into 
cooperation,  while  in  America  waste  and  exploitation  of  natural 
resources  still  prevail  in  most  agricultural  communities.  It  is 
fair  to  state,  however,  that  cooperation  is  a  success  in  the  following 
six  broad  fields: 

(1)  Production. — In  this  field  cooperation  has  registered  con- 
spicuous success  in  the  cooperative  creameries  and  cheese  factories 
in  Wisconsin,  Minnesota,  and  other  sections.  In  livestock  breed- 
ing too,  the  success  has  been  very  gratifjdng. 

(2)  In  Selling. — ^The  marketing  of  citrus  fruits  and  strawberries 
has   already   been   named.    Another  conspicuous  success  in  this 


170  COOPERATION 

field  is  the  Eastern  Shore  of  Virginia  Produce  Exchange  (Fig.  31). 
Here  the  farmers  in  two  small  counties  market  through  their 
central  organization  as  much  as  ten  thousand  carloads  of  produce 
in  a  season,  putting  it  on  the  market  under  their  own  inspection 
and  label.  This  enables  them  to  make  their  sales  largely  on  the 
f.o.b.  loading  station  basis,  securing  a  wider  distribution  and 
avoiding  market  gluts.  Only  the  poor  quality  of  produce  is  con- 
signed, and  that  without  the  *'Red  Star"  label.  One  important 
feature  of  the  sales  service  is  the  liberal  use  made  of  the  telegraph 
and  telephone  wires  in  securing  market  information.  Farmers' 
cooperative  organizations  have  also  made  successes  in  marketing 
in  many  other  fields,  including  the  following:  Egg  circles,  live- 
stock shipping  associations,  potato  warehouses,  fruit  and  vegetable 
organizations  of  various  kinds,  milk,  and  grain.  The  great  success 
of  the  farmers'  cooperative  elevator  movement  is  discussed  in  the 
chapter  on  the  Grain  Trade. 

(3)  In  Buying. — Incidental  to  some  other  form  of  cooperation 
we  find  buying  developed  successfully.  Thus  the  Farmers'  Union 
of  Maine  sells  potatoes  and  incidentally  buys  and  distributes 
fertilizer.  The  farmers'  elevators  sell  grain,  and  quite  generally 
carry  "side  lines"  purchased  by  the  farmer,  such  as  grain  cleaners, 
fertilizer,  coal,  twine,  fencing  and  many  other  lines.  Buying, 
however,  as  a  major  operation,  such  as  the  cooperative  store,  has 
not  proved  a  success,  but  quite  the  contrary,  up  to  the  present. 

(4)  Insurance. — Farmers'  mutual  insurance  companies,  par- 
ticularly hail  insurance,  fire  insurance,  and  livestock  insurance, 
have  spread  widely  over  the  country  and  have  met  with  general 
success. 

(5)  Telephone. — The  farmers'  telephone  company  is  perhaps 
the  most  widely  known  form  of  farmers'  business  undertaking. 
Information  is  lacking,  however,  to  say  to  what  extent  these  cor- 
porations are  cooperative,  and  to  what  extent  they  are  common 
joint-stock  or  "capitalistic"  corporations.  But  it  is  hkely  that 
they  are  not,  in  most  cases,  cooperative  in  the  strict  sense  of  the 
term. 

(6)  Credit. — Cooperative  credit  has  been  indeed  slow  to  take 
root  on  this  continent.  Credit  must  be  given  to  Mr.  Alphonse 
Desjardins  of  Quebec  for  establishing  in  that  Canadian  province 
our  first  real  cooperative  credit  in  America,  In  his  Caisse  Populaire. 
A  few  States  in  the  Union  have  now  undertaken  to  provide  the 
legal  machinery  for  cooperative  credit.  It  is  hardly  necessary  to 
remind  the  reader  in  passing  that  credit  based  on  first  mortgages 


THE  N.  A.  O.  S. 


171 


on  land — as  is  the  case  with  our  Federal  Farm  Loan  Act — is  land 
credit  and  not  cooperative  credit.  North  Carolina  is  building  up 
a  most  promising  program  of  success  in  the  field  of  cooperative 
credit,  under  the  leadership  of  the  State  Market  Director,  Wm. 
R.  Camp  (Fig.  32).  The  subject  of  credit  is  treated  at  length  in 
the  next  chapter. 

Economic  Significance  of  Cooperation. — While  agricultural 
cooperation  in  the  United  States  is  indeed  small  when  compared 
with  Europe,  yet  it  is  growing  greater  day  by  day.  But  a  very 
small  fraction  of  our  total  busi- 
ness, measured  in  dollars  and 
cents,  is  carried  on  through  co- 
operative channels.  But  the 
future  is  full  of  promise.  The 
states  are  one  by  one  creating 
State  Market  Bureaus,  and  these 
Bureaus  are  under  directors  who 
quite  generally  agree  in  promot- 
ing sound  cooperation,  and  put- 
ting it  in  the  hands  of  wise 
leaders.  And  soon  the  three 
thousand  counties  of  the  United 
States  mil  each  have  a  county 
agent  who  will  also  be  a  pro- 
moter of  real  cooperation  in  agri- 
culture, and  finally  the  United 
States  Department  of  Agriculture 
has  the  Bureau  of  Markets  which  fiq.  32 — 
through  its  chief,  its  field  agents 
in  marketing,  its  various  experts,  and  its  publications,  is  becom- 
ing a  tremendous  influence  in  favor  of  cooperation  among  farmers. 
Hence  the  future  of  cooperation  in  agriculture  seems  bright 
with  promise. 

The  N.  A.  O.  S. — The  National  Agricultural  Organization 
Society  aspires  to  do  as  much  for  American  Agriculture  as  Sir 
Horace  Plunkett's  Irish  Agricultural  Organization  Society  did  for 
Ireland.  The  one  real  clearing-house  of  ideas,  principles  and  prac- 
tices in  cooperative  and  other  forms  of  agricultural  organization 
is  found  in  the  conferences  on  marketing  and  farm  credits  held 
by  this  society.  The  published  volumes  of  the  proceedings  of 
these  conferences  contain  the  principal  papers  read,  but  not  the 
full  report  of  debates,  discussions,  and  round  table  talks.     This 


William  R.  Camp,  ofthe  success- 
ful North  Carolina  Credit  Union  Movement. 


172  COOPERATION 

society  works  in  harmony  with  the  various  voluntary  and  govern- 
mental agencies  which  are  seeking  to  promote  true  cooperation 
in  American  agriculture.  These  meetings  were  interrupted  by  the 
World  War.  The  work  of  the  N.  A.  O.  S.  was  likewise  suspended. 
It  remains  to  be  proved  whether  such  an  institution  will  take 
root  on  American  soil. 

Essentials  in  Cooperation. — Some  of  the  chief  factors  in  success- 
ful cooperation  are  the  following: 

A  manager  who  is  honest,  efficient,  and  well  paid. 

Ample  working  capital  and  sound  financial  reserves  and  strict 
auditing. 

A  specialized  field  of  operation. 

A  large  volume  of  business. 

Strong,  centralized  control. 

Pooling  arrangements  (in  most  selling  associations)  whereby 
an  occasional  loss  is  distributed. 

A  wider  and  better  distribution  of  the  produce  sold. 

The  goal,  always  in  mind,  is  to  improve  the  quality  of  the 
product  marketed,  to  standardize  the  pack,  advertise  and  main- 
tain the  label  or  brand,  and  to  introduce  economies  and  savings, 
so  that  both  consumers  and  producers  are  the  beneficiaries. 

Farmers  organized  in  a  cooperative  association  according  to 
the  above  principles  are  mobilized  for  their  own  protection.  They 
can  conduct  collective  bargaining  where  they  control  the  supply 
of  the  product,  and  thus  have  a  voice  in  price-making. 

QUESTIONS  ON  THE  TEXT 

1.  Give  two  definitions  of  cooperation. 

2.  Illustrate  by  several  concrete  examples  the  broader  use  of  the  term. 

3.  Distinguish  between  stock  and  non-stock  corporations. 

4.  Give  the  test  of  a  real  cooperative  corporation. 

5.  State  the  usual  tests  apphed  to  cooperative  corporations.    Give  reasons 

for  not  applving  these  tests  strictly. 

6.  Show  abuse  of  the  name  "cooperative." 

7.  What  is  the  purpose  of  cooperation? 

8.  Show  how  pubhc  pohcy  is  involved  here. 

9.  Show  how  both  producer  and  consumer  may  be  beneficiaries  of  cooperation 

among  producers. 

10.  Describe  the  cooperative  association  in  the  strawberry  district  of  Kentucky. 

11.  Show  where  cooperative  corporations  have  failed,  and  why. 

12.  What  is  the  status  of  cooperative  packing  houses? 

13.  What  was  the  Northwest  Trading  Company? 

14.  Describe  at  length  the  United  Grain  Growers. 

15.  Speak  of  the  extent  of  the  success  of  cooperation.    Compare  with  success 

in  Europe. 

16.  Comment  on  cooperation  in  these  fields:  production;  selling;  buying; 

insurance;  telephones;  credit.     What  principles  are  illustrated  by  the 
Eastern  Shore  of  Virginia  Produce  Exchange? 


REFERENCES  173 

17.  State  the  economic  significance  of  cooperation  and  its  future  outlook. 

18.  What  is  the  National  Agricultural  Organization  Society? 

19.  State  the  essentials  in  successful  cooperation. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Give  arguments  for,   and  outlook  for,   consumers'   cooperation  in  the 

United  States. 

2.  Secure  the  last  annual  report  of  some  cooperative  association,  and  analyze 

its  business.  From  this  report  answer  the  following  questions:  What 
is  the  marketing  cost  per  unit  (bushel,  box,  dollar,  etc.)?  What  is 
spent  for  market  news  service?  For  advertising?  How  widely  is  the 
product  distributed? 

REFERENCES 

1.  Annual  Report,  1918,  United  Grain  Growers,  Winnipeg,  Canada. 
(Contains  also  Report  of  Committee  appointed  by  Board  of  Directors  to  visit 
the  Farmers'  organizations  of  the  United  States,  with  special  reference  to 
cooperative  trading). 

2.  Cooperative  Societies  in  Finland,  reported  by  Consul  Thornwell 
Haynes,  Helsingfors,  Daily  Commerce  Reports,  Washington,  July  19,  1919, 
p.  393. 

3.  Jessness,  O.  B.,  and  Kerr,  W.  H.:  "Cooperative  Purchasing  and 
Marketing  Organizations  Among  Farmers  in  the  United  States."  Bulletin 
No.  547  United  States  Department  of  Agriculture,  Washington,  September, 
1917.  Contains  selected  hst  of  pubhcations  on  cooperative  purchasing  and 
marketing. 

4.  Minnesota  Farmers'  Institute  Annual,  Cooperation  Number,  No.  26, 
St.  Paul,  1913. 

5.  See  also  printed  reports  of  important  cooperative  associations,  such 
as  California  Fruit  Growers'  Exchange,  Los  Angeles;  United  Grain  Growers, 
Winnipeg.    Consult  also  official  papers  issued  by  farmers'  organizations. 

6.  Yearbook  Department  of  Agriculture:  1910,  Powell,  G.  H.:  "Cooper- 
ation in  Handling  and  Marketing  Fruit,"  391-407;  1914,  Bassett,  C.  E., 
MooMAW,  C.  W.,  Kerr,  W.  H.:  "Cooperative  Marketing  and  Financing 
of  Marketing  Associations,"  185-211;  1915,  Bassett,  C.  E.:  "Cooperative 
Purchase  of  Farm  SuppUes,"  73-83;  1916,  Macpherson,  Hector;  Kerr, 
W.  H.:  "A  Federated  Cooperative  Cheese  Manufacturing  and  Marketing 
Association,"  145-159;  1917,  Jessness  and  Bassett  (Cooperative  Marketing 
—Where— When— How?),  385-395. 

7.  Adams,  H.  B.  :  "History  of  Cooperation  in  the  United  States,"  Johns 
Hopkins  University  Studies,  Vol.  6,  1888. 

8.  International  Institute  of  Agriculture,  Rome.  International  Review  of 
Agricultural  Economics.  Siberia. — "Agricultural  Cooperation,"  April,  1919, 
167-185;  Rmsia.—" Eggs,"  Sept.,  1917,  7-12;  "Flax,"  July,  1917,  14-22; 
June-July,  1919,  351-352;  "Butter,"  January,  1918,  18-22.  G^aHcm.—" For- 
estry," Feb.,  1918,  110;  Ireland. — "Irish  Agricultural  Organization  Society," 
March,  1918,  205-208;  >Saxon?/.— "Twenty-fourth  Year  of  cooperation,"  Jan- 
uary, 1917,  1-6;  Denmark.— "Abattoirs,"  May,  1916,  1-16;  June,  1916,  1-19; 
"Eggs,"  Dec,  1916,  11-30.  Norway.— "Briei  History  of  Agricultural  Coop- 
eration in  Norway,"  Aug.,  1916,  16-33;  United  States.—WEhD,  L.  D.  H.: 
"Cooperation  in  Minnesota,"  Feb.,  1916,  12-28;  March,  1916,  25-33. 

9.  Powell,  G.  Harold:  "Cooperation  in  Agriculture,"  New  York,  1914. 

10.  Coulter,  John  Lee:  "Cooperation  Among  Farmers,"  New  York, 
1914. 

11.  "Special  Report  of  New  York  Delegates  on  American  Commission 
for  the  Study  of  Agricultural  Cooperation  in  Europe,"  Department  of  Ag., 
Albany,  Bulletin  56,  Feb.,  1914. 


CHAPTER  XI 

CREDIT 

Debt. — "Many  neighbors  have  sold  out  and  quit  farming," 
writes  a  northwestern  farm  woman,  ''because  they  had  to.  We 
wdll  have  to  sell  this  fall,  because  we  are  so  deep  in  debt — it  will 
nearly  kill  me  if  we  have  to  leave  the  farm.  I  do  so  want  to  keep 
my  husband  and  children  there.  I  don't  see  how  I  can  part  with 
the  horses.  I  hate  the  cities  and  am  afraid  of  them,  so  I  hope  that 
the  lawmakers  will  believe  that  ours  is  a  real  need.  I  am  25  years 
old  and  our  children  are  aged  6,  4,  and  2^  years.  I  don't  belong 
to  the  'I  Won't  Works,'  but  would  like  a  little  pay." 

This  letter  is  one  from  a  collection  of  many  received  from  farm 
women  in  response  to  an  inquiry  on  ''How  the  U.  S.  Department 
of  Agriculture  can  better  meet  the  needs  of  farm  housewives?" 

It  illustrates  in  a  concrete  way  the  very  disagreeable  fact  that 
the  farmer's  credit  problem  is,  in  certain  cases,  a  real  one.  The 
letter  suggests  that  our  lawmakers  "do  something"  to  meet  the 
credit  needs  of  the  day. 

New  View  of  Credit. — The  attitude  of  the  public  mind  has 
undergone  a  tremendous  revolution  on  the  subject  of  credit.  About 
two  hundred  years  ago  a  French  king  said,  "Credit  supports 
agriculture  as  the  rope  supports  the  hanged."  In  our  own  history 
the  New  England  idea  of  thrift  and  the  teaching  of  Poor  Richard's 
Almanac  were  both  to  the  effect  that  debt  is  a  disgrace  and  must 
be  avoided  like  the  plague.  Hence  a  mortgage  came  to  be  looked 
on  as  a  disgrace,  a  sort  of  skeleton  in  the  family  closet.  There 
was  some  excuse  for  this  attitude  in  the  days  of  free  land,  of  home- 
spun clothing,  of  homemade  tillage  tools.  Farming  then  was  really 
an  investment  of  labor  on  free  land.  But  now  farming  represents 
the  balanced  investment  of  three  factors  of  production — land, 
labor,  and  capital.  In  short,  agriculture  is  now  on  a  capitalistic 
basis.  The  land  has  a  large  cash  value.  The  farm  equipment  has 
a  large  cash  value.  Agriculture  has  come  to  be  a  business  involving 
the  administration  of  capital.  According  to  the  1910  census,  the 
average  Iowa  farm  represented  an  investment  in  land  and  farm 
buildings  of  $15,008,  in  farm  machinery  of  $440,  and  in  livestock 
of  $1811.  In  other  words  the  Iowa  farmer  has  a  business  invest- 
ment of  $17,259.  The  village  merchant  can  no  longer  proudly 
174 


CAPITALISTIC  AGRICULTURE  175 

arrogate  to  himself  the  title  of  ''business  man"  and  look  down  on 
the  farmer  as  a  mere  tiller  of  the  soil. 

Capitalistic  Agriculture. — When  agriculture  in  America  became 
a  capitalistic  business,  there  came  also  a  new  attitude  towards 
credit.  The  word  ''credit"  came  into  use  in  place  of  the  old  word 
"debt."  Debt  was  no  longer  considered  a  badge  of  dishonor,  a 
mark  of  non-prosperity,  or  even  as  something  to  be  avoided.  The 
practice  of  the  great  public  utility  corporations,  particularly  the 
railroads,  of  piling  up  big  debts,  at  low  rates  of  interest,  in  long 
term  bonds,  invested  in  income  yielding  property,  and  with  the 
fixed  business  policy  of  never  paying  off  these  debts  (but  of  re- 
funding them)  proved  suggestive  to  agriculture.  Why  should  a 
railroad,  for  instance,  keep  out  of  debt,  when  it  can  borrow  at 
4  per  cent  and  make  a  return  of  8  per  cent  on  this  money?  Evi- 
dently, the  more  a  railroad  could  increase  its  debt — provided 
always  the  interest  rate  was  low,  the  investment  safe,  and  the 
return  large — the  better  off  it  would  be  financially.  The  instinct* 
of  the  individual  farmer,  however,  leads  him  to  desire  to  own  his 
farm  in  fee  simple  and  free  from  encumbrance.  But  for  the  sake 
of  securing  the  balanced  investment  of  land,  labor,  and  capital, 
it  has  come  to  mean  in  many  cases  that  the  farmer  must  borrow. 
The  social  significance  of  farm  credit  and  a  permanent  agriculture 
is  apparently  grasped  by  but  few  writers  and  speakers.  The 
country  is  under  obligation  to  Dean  Thomas  Forsyth  Hunt  of 
the  University  of  California  for  clearly  seeing  this  problem  and 
in  clearly  stating  it  to  his  country.^  Quoting  from  his  remarks 
on  this  subject  we  have  the  following  excerpts: 

"As  long  as  the  people  in  the  country  raise  larger  families  than  those  in 
the  cities,  and  the  cities  continue  to  grow  faster  than  the  country,  it  follows 
that  in  the  cities  every  generation  must  be  affected  by  the  character  of  the 
previous  generation  in  the  country. 

"  New  York  and  Boston  are  rapidly  becoming  un-American  cities  for  the 
simple  reason  that  they  do  not  raise  enough  children  to  maintain,  let  alone 
increase,  their  population.  Almost  exactly  one-half  of  the  people  of  Manhattan 
are  foreign-born.  Less  than  15  per  cent  have  two  American-born  parents. 
Los  Angeles*  has  become  the  puritanic  center  of  America;  Boston  is  now  the 
second  Dublin  of  the  world.  Hoboken  does  not  dare  to  have  a  parade  on  the 
Fourth  of  July.  Unless  our  children  occupy  the  country,  our  grandchildren 
will  not  occupy  the  cities.  It  is  the  people  who  occupy  the  land  who  will 
eventually  inherit  the  earth  ...  If  farms  must  be  recapitalized  at  least  three 
times  in  a  century;  if  young  men  are  born  into  the  world  without  capital  to 
finance  them;  if  the  permanence  of  society  is  dependent  upon  a  rural  popula- 
tion, not  merely  because  it  creates  wealth,  but  because  it  grows  children,  then 
what  are  we  going  to  do  about  it?  .  .  .  For  years  the  savings  of  the  people 
have  been  used  in  developing  railways,  manufacturing  plants,  department 

1  64  Cong.  1  Sess.  Senate  Doc.  239. 


176  CREDIT 

stores,  public  buildings  and  city  streets.  A  large  part  of  the  development  of 
private  corporations  as  well  as  the  public  improvements  of  cities,  has  been 
due  to  the  savings  of  the  people,  borrowed  largely  at  4  to  5  per  cent.  The 
land-credit  plan  is  intended  to  allow  the  savings  of  the  people  to  be  invested 
in  the  land  in  order  that  a  permanent  agriculture  may  develop. 

"Men  in  cities  now  conduct  great  enterprises,  enjoy  comfortable  trans- 
portation facilities,  occupy  luxurious  offices,  and  eat  in  sumptuous  restaurants 
without  having  a  dollar  of  their  own  money  invested  in  these  agencies  except 
as  they  may  carry  Ufe  insurance  or  invest  in  stocks  and  bonds.  The  phenome- 
nal development  of  the  cities  within  recent  years  would  have  been  impossible 
were  this  not  so.  Farming  is  the  one  great  industry  remaining  in  which  men 
commonly  invest  their  own  money  in  order  to  engage  in  the  business." 

United  States  Studies  Credit  in  Europe. — Rural  credit  became 
an  issue  in  American  political  life  about  the  year  1912.  In  that 
year  President  Taft  addressed  letters  to  the  State  Governors, 
inviting  them  to  a  conference  at  the  White  House  for  the  purpose 
of  discussing  agricultural  credit.  In  this  letter,  among  other 
things.  President  Taft  said : 

''For  some  months  past,  at  my  direction,  the  Department  of  State, 
through  its  diplomatic  officers  in  Europe,  has  been  engaged  in  an  investigation 
of  the  agricultural  credit  system  in  operation  in  certain  of  the  European 
countries.  Although  the  investigation  is  still  under  way,  a  prehminary  report 
has  been  submitted,  together  with  the  recommendations  of  Ambassador 
Myron  T.  Herrick  in  connection  with  my  proposal  to  adopt  this  system  in 
the  United  States. 

"A  study  of  these  reports  and  of  the  recommendations  of  Ambassador 
Herrick,  which  I  am  sending  you,  convinces  me  of  the  adaptability  to  American 
conditions  of  the  cooperative  credit  plan  as  set  forth  in  the  organization  of 
the  Raiffeisen  banks  of  Germany.  The  estabhshment  and  conduct  of  such 
banks,  however,  are  matters  for  State  control.  I  suggest  also  the  estabhsh- 
ment of  land  mortgage  banks  .  .  . 

"The  need  for  the  estabhshment  of  an  adequate  financial  system  as  an 
aid  to  the  farmers  of  this  country  is  now  quite  generally  recognized.-  The 
governmental  initiative,  taken  by  the  Department  of  State  under  instructions 
issued  by  my  direction  to  the  diplomatic  officers  in  Europe  on  March  18  last, 
have  been  effectively  supplemented  by  the  American  Bankers  Association, 
the  Southern  Commercial  Congress,  and  by  many  other  bodies  by  whom  this 
question  has  been  agitated,  and  valuable  work  has  been  done  in  studying  and 
disseminating  knowledge  of  those  great  instrumentahties  which  have  been 
created  in  foreign  lands  to  extend  to  their  agriculturists  credit  facilities  equal 
in  benefits  to  those  enjoyed  by  their  industrial  and  commercial  organizations. 
The  handicap  placed  upon  the  American  farmer  through  the  lack  of  such  a 
system,  and  the  loss  sustained  by  the  whole  citizenship  of  the  nation  because 
of  this  failure  to  assist  the  farmers  to  the  utmost  development  of  our  agricul- 
tural resources,  is  readily  apparent. 

"The  .  .  .  farmers  of  the  United  States  add  each  year  to  the  national 
wealth  $8,400,000,000.  They  are  doing  this  on  a  borrowed  capital  of 
$6,040,000,000.  On  this  sum  they  pay  annual  interest  charges  of  $510,000,000. 
Counting  commissions  and  renewal  charges,  the  interest  rate  paid  by  the 
farmers  of  this  country  is  averaged  at  8]i  per  cent,  as  compared  to  a  rate  of 
four  and  a  half  to  three  and  a  half  per  cent  paid  by  the  farmer,  for  instance, 
of  France  or  Germany. 

"Again,  the  interest  rate  paid  by  the  American  farmer  is  considerably 
higher  than  that  paid  by  our  industrial  corporations,  railroads  or  municipah- 


BEGINNING  OF  COOPERATIVE  CREDIT  IN  AMERICA     177 

ties.  Yet,  I  think,  it  will  be  admitted  that  the  security  offered  by  the  farmer 
on  his  farm  lands  is  quite  as  sound  as  that  offered  by  industrial  corporations. 
Why,  then,  will  not  the  investor  furnish  the  farmer  with  money  at  as  advant- 
ageous rates  as  he  is  willing  to  supply  it  to  the  industrial  corporations?  Obvi- 
ously the  advantages  enjoyed  by  the  industrial  corporation  lie  in  the  financial 
machinery  at  its  command,  which  permits  it  to  place  its  offer  before  the  investor 
in  a  more  attractive  and  more  readily  negotiable  form.  The  farmer  lacks  this 
machinery,  and,  lacking  it,  he  suffers  unreasonably." 

This  quotation  is  given  at  length  because  it  so  clearly  states 
the  credit  problem  of  the  United  States  and  at  the  same  time 
suggests  its  solution — land  mortgage  credit  and  cooperative  credit. 
These  principles  announced  by  President  Taft  bore  fruit  in  the 
year  1916.  This  is  the  date  of  a  new  era  in  credit  in  the  United 
States  on  account  of  the  Federal  Farm  Loan  Act  enacted  then. 

Long-  and  Short-Time  Credit. — The  farmer  uses  two  kinds  of 
credit,  long-time  credit  and  short-time  credit.  The  long-time 
credit  generally  takes  the  form  of  a  mortgage  on  real  estate.  The 
short-time  credit  is  commonest  found  in  the  form  of  a  book  account 
at  the  village  stores.  Less  frequently  the  farmer  signs  notes  at 
the  bank.  It  is  impossible  to  state  the  rate  of  interest  charged  on 
short-time  loans  for  the  whole  United  States,  so  much  do  conditions 
vary  in  different  sections.  In  the  newer  sections,  and  in  the  cotton- 
crop  sections  of  the  South,  conditions  are  burdensome  almost 
beyond  belief.  Take  Texas  as  an  illustration.  ''Texas  debtor 
farmers,"  says  an  official  bulletin  from  the  Agricultural  and  Me- 
chanical College  of  that  State,  ''have  been  paying  to  banks  10 
to  40  per  cent  interest  per  annum,  or  to  credit  merchants  10  to 
60  per  cent  above  cash  prices.  This  credit  system,  either  as  cause 
or  effect,  uniformly  prevails  with  all-cotton  farming,  or  all-wheat 
farming  or  any  other  form  of  one-crop  farming."  There  are  parts 
of  the  South,  particularly  the  Delta,  where  the  cotton  crop  Hen 
system  has  produced  a  credit  condition  even  worse  than  that 
described  in  Texas.  As  the  farming  becomes  more  diversified, 
especially  where  livestock  is  raised  extensively,  credit  conditions 
on  short-time  loans  become  better.  In  old  and  prosperous  farming 
sections  the  farmer  is  able  to  secure  short-time  loans  from  the 
bank  at  the  same  rate  as  the  town  merchant.  And  in  all  sections 
the  more  prosperous  farmers  get  all  the  credit  from  local  banks 
that  they  are  entitled  to,  and  at  regular  banking  rates. 

Beginning  of  Cooperative  Credit  in  America. — Alphonse  Des- 
jardins  was  the  first  to  introduce  cooperative  credit  on  the  Ameri- 
can continent  (Fig.  33).  He  began  his  cooperative  people's  bank 
among  the  French  Catholics  in  the  province  of  Quebec  in  the  year 
1900.  Thus  he  was  favored  at  the  outset  with  unity  of  race  and 
2 


178 


CREDIT 


religion.  At  the  small  town  of  Levis  he  organized  among  laboring 
men  and  farmers  his  first  credit  union,  or  ''La  Caisse  Populaire  de 
Levis"  as  it  is  called  there.  The  success  of  this  first  experiment 
caused  the  idea  to  spread  throughout  all  French  Canada,  so  that 
in  less  than  five  years  154  similar  cooperative  banks  had  been 
formed  in  other  parishes.  The  total  turnover  in  the  first  16  years 
was  $3,519,123.84  with  gross  profits  amounting  to  $107,719.05, 
and  a  total  working  expense  of  $8,832.  The  working  men  and 
farmers  choose  their  own  management,  provide  all  the  funds  them- 
selves, loan  the  money  to  them- 
selves, and  in  most  cases  their 
honor  alone  is  the  main  security. 
The  Credit  Union.— The  suc- 
cess with  cooperative  credit  in 
Quebec  led  first  Massachusetts 
and  then  other  American  States 
to  try  to  introduce  this  Canadian 
system  under  the  name  of  Credit 
Union.  But  as  usually  happens, 
the  taking  over  of  a  foreign  sys- 
tem did  not  prove  very  successful. 
Massachusetts  set  the  example 
(in  1909),  being  followed  promptly 
by  eight  other  States,  as  follows: 
Texas  (1913),  Wisconsin  (1913), 
New  York  (1914),  Rhode  Island 
(1914),  North  CaroUna,  Utah, 
South  Carolina,  Oregon — all  four 
in  1915.  As  these  lines  are  being 
written  (1920),  Massachusetts  has  nearly  60  credit  unions;  New- 
York,  40;  North  Carolina,  30;  Rhode  Island,  1;  and  the  other 
five  States  none.  The  credit  unions  in  Massachusetts  and  New 
York  are  almost  wholly  in  cities,  and  hence  have  no  significance 
for  agriculture.  In  North  Carolina,  however,  the  credit  union 
is  largely  rural,  and  hence  constitutes  agricultural  cooperative 
credit.  For  our  purpose,  then,  we  will  analyze  in  detail  the  North 
Carolina  system. 

North  Carolina  Method. — The  first  financial  statement  issued 
by  the  Credit  Unions  of  North  Carolina  appeared  in  March,  1916. 
One  year  later  a  second  statement  was  issued,  making  a  comparison 
of  conditions  at  the  two  dates,  and  showing  one  year's  growth. 
The  number  of  credit  unions  grew  from  6  to  14;  the  membership 


33. — Alphonse    Desjardins,    father 
the  People's  Banks  of  Canada. 


MYRON  T.  HERRICK'S  CRITICISM  179 

increased  from  201  to  505;  depositors  from  29  to  146;  payments 
on  shares  from  $1,132  25  to  $4,327.53;  deposits  from  $959.76  to 
$3,763.40;  cash  in  banks  from  $1,299.78  to  $2,666.15;  amount  bor- 
rowed from  banks  from  $100.00  to  $1,450.00;  and  total  resources 
from  $2,264.89  to  $11,448.31.  This  shows  a  growth  in  resources 
of  over  500  per  cent  in  one  year.  The  secret  of  the  success  of  the 
leading  Credit  Unions,  says  their  Superintendent,  is  that  they  have 
helped  finance  their  members  in  the  cooperative  purchase  of  sup- 
pHes.  Emphasis  should  also  be  laid  on  their  encouragement 
of  thrift. 

The  North  Carolina  Credit  Union  is  a  society  with  a  dual 
purpose,  namely,  to  encourage  savings  and  to  utilize  these  savings 
for  productive  agricultural  purposes.  Loans  are  made  to  members 
only  and  for  productive  purposes  only.  Leadership  in  organizing 
aU  the  early  credit  unions  in  this  State  came,  as  the  law  provided, 
from  the  Division  of  Markets  and  Rural  Organization  of  the  State 
Agricultural  Experiment  Station  and  Extension  Service.  This 
explains  their  growth  in  rural  communities.  The  funds  of  the 
union,  as  seen  from  the  financial  statement  (Appendix)  come 
from  share  capital,  deposits,  and  loans  from  banks.  The  par 
value  of  a  share  is  usually  $10,  but  may  be  higher,  up  to  $25. 
Boys  and  girls  are  permitted  to  pay  for  shares  on  the  installment 
plan  at  25  cents  a  month,  and  adults  at  $2.50  semi-annually. 
Deposits  may  be  received  from  members  and  non-members. 
Four  per  cent  interest  is  paid  on  deposits.  The  rate  charged  bor- 
rowers is  6  per  cent.  At  the  same  time  the  rate  charged  by  supply 
stores  for  book  credit  averages  38.4  per  cent.  Most  of  the  loans 
made  by  the  North  Carolina  credit  unions  have  been  for  fertilizer. 
The  Superintendent  of  Credit  Unions  in  that  State  expects  to  see 
two  very  important  results  follow  from  a  general  introduction  of 
credit  unions:  (1)  Farmers  should  buy  supphes  in  large  quantities 
at  wholesale  prices;  (2)  If  the  farmer  can  get  credit  on  the  same 
terms  as  the  middleman,  he  can  afford  to  store  his  products  and 
hold  them  off  the  market  till  a  favorable  time  arrives  for  disposing 
of  them.  One  apparent  tendency  is  for  the  Credit  Union  to  borrow 
more  and  more  from  the  banks,  thus  acting  as  a  mere  middleman 
in  bujdng  and  selling  credit. 

Myron  T.  Herrick*s  Criticism. — Very  high  hopes  were  enter- 
tained by  many  thoughtful  persons  that  at  last  the  Credit  Unions 
had  arrived  to  solve  the  problem  of  cooperative  credit  in  American 
agriculture.  But  our  greatest  critic  in  this  field.  Ex-ambassador 
Myron  T.  Herrick,  pronounced  these  various  State  laws,  as  soon 


180  CREDIT 

as  they  appeared,  wrong  in  principle.  He  advocated  the  principle 
of  an  association  or  voluntary  union  of  persons,  preserving  the 
equality  and  personal  responsibility  of  members,  on  the  one-man- 
one- vote  plan;  with  or  without  share  capital;  liability  limited  or 
unlimited;  shares  payable  in  installments  and  withdrawable  at 
any  time.  He  claims  that  such  a  plan  would  in  the  beginning 
produce  small  results,  but  it  would  grow  rapidly.  The  community 
would  finally  finance  itself.  The  three  sources  of  loans  would  be 
share  capital,  savings  deposits,  and  occasionally  borrowed  funds. 
This  plan  is  very  much  like  the  Canadian  system.  In  many 
respects  it  resembles  the  North  Carolina  plan,  particularly  in  that 
it  provides  for  receiving  savings  deposits  from  both  members  and 
non-members.  Deposits  from  non-members  are  forbidden  in 
most  of  the  State  laws.  It  is  an  interesting  question  for  the  student 
investigator,  why  States  like  Wisconsin,  with  a  model  law  on 
credit  unions,  have  no  credit  unions.  Does  it  mean  that  the 
present  banking  system  furnishes  the  farmer  all  the  credit  he  is 
entitled  to? 

Land  Credit — ^The  Federal  Farm  Loan  Act. — ^The  distinction 
should  be  borne  in  mind  between  long-time  credit  and  short-time 
credit,  between  land  credit  and  cooperative  credit.  Both  are 
needed.  Each  supplements  the  other.  One  is  needed  for  perma- 
nent investment  in  the  purchasing,  equipment,  and  improvement 
of  farm  land;  the  other  is  needed  to  finance  the  farm  operations 
from  one  harvest  to  another.  One  can  be  used  only  by  the  land 
owner;  the  other  can  be  used  by  the  landless  man  or  by  the 
insolvent  farmer. 

The  Federal  Farm  Loan  Act  became  a  law  July  17,  1916.  It 
is,  in  principle,  self-help  plus  government  aid  in  getting  the  system 
into  operation.  But,  once  in  operation,  the  government  merely 
supervises  the  system,  but  grants  no  State  aid  to  it.  A  careful 
examination  of  the  main  provisions  of  this  epoch-marking  Act 
shows  that  the  government  merely  ''primes  the  pump,"  but  does 
not  furnish  the  money. 

The  Federal  Farm  Loan  Act  provides  certain  channels  for  the 
farmer  through  which  he  obtains  cheap  money,  on  the  long-time, 
easy  payment  plan.  It  introduces  the  amortization  principle  into 
agricultural  finance  in  America.  This  law  furnishes  to  the  investor 
on  the  money  market  a  standard  liquid  security,  in  place  of  the 
old  farm  mortgage,  which  is  neither  liquid  nor  standard,  as  the 
old-time  farm  mortgage  could  not  readily  be  turned  into  cash  and 
no  two  farm  mortgages  were  exactly  alike.     Hence  the  general 


LAND  CREDIT— THE  FEDERAL  FARM  LOAN  ACT   181 

investing  public  never  familiarized  themselves  with  them.  This 
new  law  offers  to  the  investor  a  debenture  known  as  a  farm  loan 
bond — standard  and  liquid,  and  destined  to  become  famihar  to 
every  investor.  Underlying  the  bond  is  the  first  mortgage,  and 
underlying  the  mortgage  is  farm  land  worth  twice  the  amount  of 
the  mortgage.  Hence  the  farmer  is  put  in  the  same  financial 
condition,  as  regards  the  money  market,  as  the  great  industrial 
corporations.  Before  the  World  War  disturbed  credits  the  farmer 
was  paying  five  per  cent  on  his  loans  under  this  Act,  and  this  was 
the  rate  paid  by  the  United  States  Steel  Company  on  its  bonds, 
and  this  is  the  largest  business  corporation  in  the  world.  Fin- 
ancing the  World  War  embarrassed  somewhat  the  country's  early 
administration  of  this  Act,  hence  it  became  necessary  to  raise 
the  rate. 

The  machinery  of  this  Act  is  very  simple.  To  get  the  benefit 
of  cheap  land  credit  the  law  provides  that  farmers  must  band 
themselves  together  in  corporations,  at  least  ten  farmers  in  the 
group.  The  federal  government  located  and  established  twelve 
land  banks,  and  advanced  the  original  capital  to  each  one,  namely 
$750,000.  The  government  appointed  temporary  directors  to 
serve  the  system.  The  next  move  was  for  the  farmer  to  make. 
They  incorporated  their  local  loan  associations.  They  applied 
for  loans,  furnishing  as  security  first  mortgages  on  farm  lands  of 
twice  the  value  of  the  loans  sought.  These  mortgages  were  then 
deposited  in  the  district  land  bank  and  safely  placed  in  the  vaults. 
Against  these  five  per  cent  mortgages  the  Land  Bank  sold  4)^  per 
cent  farm  loan  bonds,  receiving  a  premium  of  one  and  one-eighth 
for  them.  Customers  for  these  bonds  comprise  banks,  insurance 
companies,  savings  banks,  private  parties,  and  any  other  investor 
seeking  a  safe,  liquid,  tax-free  four  and  one-half  per  cent  security. 
The  District  Land  Bank  thus  had  a  profit  of  one-half  per  cent  plus 
any  premium  received — a  big  profit  in  all,  considering  the  volume 
of  the  business.  These  two  provisions  of  the  law  are  worthy  of 
note:  (1)  When  the  farmers  in  one  district  take  out  loans  amount- 
ing to  two  million  dollars,  they  take  control  of  the  district  Land 
Bank.  They  choose  six  of  the  nine  directors,  and  these  six  must 
be  actual  borromng  farmers.  (2)  When  the  farmers  of  the  district 
take  out  loans  amounting  to  fifteen  million  dollars,  the  govern- 
ment capital  must  all  be  paid  back.  At  this  writing  loans  greatly 
in  excess  of  this  amount  have  already  been  applied  for.  Hence, 
under  this  Act,  the  farmers  are  to  own  and  operate  the  Land  Banks. 
The  government,  in  short,  is  simply  helping  the  farmer  help  himself. 


182  CREDIT 

The  president  appoints  a  board  of  four  men,  who,  acting  with 
the  Secretary  of  the  Treasury,  constitute  the  Federal  Farm  Loan 
Board  and  exercise  general  supervision  over  the  whole  system. 

This  Act  also  provides  that  after  it  has  been  in  operation  one 
year  and  it  appears  that  a  communitj^  does  not  have  and  is  not 
likely  to  have  a  local  loan  association,  then  the  district  land  bank 
may  appoint  as  agent  a  local  bank.  The  local  bank  will  then 
undertake  to  act  as  intermediary  between  the  borrowing  farmer 
and  the  land  bank,  receiving  a  commission  of  one-half  of  one  per 
cent  on  the  loan. 

Joint  Stock  Land  Banks. — This  act  also  provides  that  private 
individuals  may  incorporate  land  banks,  similar  in  general  out- 
lines to  the  District  Land  Banks,  and  that  these  joint  stock  land 
banks  may  loan  to  farmers  on  first  mortgage  security,  obtaining 
the  necessary  funds  by  selling  on  the  money  market  farm  loan 
bonds,  tax  free.  In  short,  the  joint  stock  land  banks  secure  and 
administer  funds,  in  substantially  the  same  method  as  the  District 
Land  Banks.  In  loaning  funds,  however,  they  deal  direct  with  the 
individual  farmer  in  their  territory.  Already  the  number  of  these 
joint  stock  land  banks  exceeds  the  number  of  District  Land  Banks. 

Significance  of  Cheap  Credit. — The  Farm  Loan  Act  has  had 
two  marked  effects,  namely,  it  has  greatly  reduced  the  interest* 
rate  on  farm  mortgages  in  all  newer  sections  of  the  United  States ; 
it  has  introduced  the  long-time,  amortization  plan  of  repayment./ 
The  Act  has  been  in  operation  too  short  a  time  to  permit  of  exten- 
sive criticism  of  it.  Certain  questions  arise,  however.  The  Act  was 
designed  to  help  the  needy  farmer  in  particular.  But  who  borrows 
first — the  prosperous,  shrewd  farmer,  who  sees  a  chance  to  enlarge 
his  holdings  and  buy  out  his  unprosperous  neighbor  by  means  of  a 
loan  under  this  Act?  Or  is  it  the  struggling  farmer  who  is  not 
classed  as  a  good  manager?  Since  a  loan  is  made  only  on  the  secur- 
ity of  a  first  mortgage  on  land,  a  landless  man  cannot  borrow.  He 
must  first  secure  title  to  the  land  in  order  to  give  a  first  mortgage. 

This  Act  makes  the  farm  loan  bonds  tax  free;  it  also  declares 
them  to  be  ''instrumentalities  of  the  government" — whatever  that 
may  mean;  it  therefore  confers  special  privileges  on  the  borrowers. 
From  the  social  viewpoint  the  large  and  fundamental  question 
involved  is  this :  Will  not  this  law,  by  making  borrowers  a  favored 
class,  in  the  end  enable  the  already  prosperous  land  owner  to  be 
more  prosperous  and  buy  more  land  at  the  expense  of  the  so-called 
poor  farmer?  Poor  men  have  poor  ways,  says  the  old  proverb. 
Probably  no  law  can  make  them  richer. 


THE  FEDERAL  RESERVE  SYSTEM  AND  AGRICULTURE    183 

Again,  ''cheap  money  means  dear  land,"  just  as  "dear  money" 
ha&'  meant ''  cheap  land  "  in  the  West.  The  Act  will  therefore  tend 
to  raise  land  values.  If  therefore  the  Act  was  designed  to  help  the 
landless  man  and  the  tenant  get  a  farm  with  cheap  money,  and  the 
farm  land  becomes  high  in  price  because  of  the  Act,  it  clearly 
defeats  its  own  end.    But  such  is  the  paradox  of  cheap  money. 

As  originally  passed,  the  Act  permitted  one  borrower  to  bor- 
row but  ten  thousand  dollars.  With  such  a  small  sum,  a  prosperous 
farmer  could  not,  of  course,  buy  out  many  weak  neighbors.  But 
already  the  ''large  farmers"  are  asking  to  have  the  loan  Umit 
changed  to  $25,000.  This  change  would  facilitate  the  concentra- 
tion of  land  ownership  in  the  hands  of  those  who  are  prosperous 
and  successful  as  landowners.  In  fact  one  is  tempted  to  ask  the 
brutal  question :  Is  it  possible  or  desirable  to  prevent,  by  legisla- 
tion, the  workings  of  the  law  of  the  survival  of  the  fittest? 

The  Life  Insurance  Companies. — The  four  chief  sources  of  loans 
on  farm  mortgages,  before  the  establishment  of  the  Federal  I^and 
Banks,  were  life  insurance  companies,  banks,  mortgage  companies, 
and  private  lenders.  The  Farm  Loan  Act  forced  the  insurance 
companies  to  meet  a  new  form  of  competition,  namely,  lower 
interest  rates  and  long-term,  amortization-plan  loans.  The  insur- 
ance companies  promptl}^  met  this  competition,  and  even,  in  some 
cases,  offered  better  terms  than  the  Federal  Land  Banks  could. 
The  insurance  companies  offered  two  distinct  advantages:  (1) 
loans  secured  direct  from  the  company  without  joining  any  asso- 
ciation; (2)  money  loanable  on  second  mortgages  as  well  as  first 
mortgages.  The  public  has  the  benefit  of  testing  the  two  systems, 
side  by  side. 

The  Federal  Reserve  System  and  Agricultiire. — The  long 
campaign  for  reforms  in  our  commercial  banking  system  finally 
produced  our  Federal  Reserve  Bank  Act.  This  act,  with  its  later 
amendments,  provided  for  an  elastic  currency  based  on  commercial 
assets,  and  for  the  pooling  and  mobilizing  of  bank  reserves.  All 
national  banks  must  and  all  State  banks  may  join  the  Federal 
Reserve  system.  Under  this  act,  for  the  first  time,  national  banks 
are  permitted  to  loan  money  on  farm  mortgages.  However,  what 
is  doubtless  far  more  important  to  agriculture  is  the  provision 
for  short-time  agricultural  credit.  Ordinary  commercial  borrowers 
limit  their  loans  to  a  period  of  three  months.  Whereas  the  farmer 
is  permitted  to  borrow  for  six  months.  Under  this  act  there  is 
now  developing  that  form  of  commercial  paper  known  as  the 
Trade  Acceptance. 


184  CREDIT 

Trade  Acceptance. — The  greatest  reform  in  short  time  rural 
credit  in  recent  j^ears  is  that  promised  by  the  use  of  the  trade 
acceptance.  It  is  the  cheapest  and  best  form  of  credit  known  and 
is,  it  is  hoped,  destined  to  take  the  place  of  "open  account"  or 
book  credit — the  most  expensive  form  of  credit  known.  It  should 
take  the  place  of  the  promissory  note  where  the  term  is  not  over 
six  months.  The  farmers'  cooperative  store  or  the  individual 
farmer,  when  buying  fertihzer,  feeds,  seeds,  agricultural  machin- 
ery, livestock,  or  other  agricultural  suppUes,  may  sign  a  trade 
acceptance,  running  as  long  as  six  months  if  necessary.  This 
acceptance  he  will  pay  when  due,  at  his  bank,  like  a  promissory 
note.  It  is,  however,  far  superior  to  the  promissory  note,  when 
the  holder  of  it  seeks  to  rediscount  it  or  realize  on  it  in  paying  his 
own  accounts,  since  on  the  face  of  it  it  shows  that  an  actual  trans- 
action has  taken  place  in  productive  material.  A  promissory  note 
fails  to  do  this.  In  other  words,  here  is  a  form  of  standard,  Uquid 
security  which  can  be  turned  into  money  at  the  Reserve  bank  in 
the  large  city  with  the  maximum  of  safety  and  the  minimum  of 
expense.  Already  the  large  farmers  are  using  the  trade  accept- 
ance rather  than  ask  their  local  dealer  to  carry  them.  And  when 
trade  acceptances  are  once  used  their  success  and  popularity  are 
assured.  Country  bankers  are  urging  their  patrons  to  use  this 
credit  instrument.  For  some  psychological  reason  the  trade  accept- 
ance is  paid  promptly  at  maturity,  whereas  a  promissory  note  is, 
in  many  sections,  not  so  paid. 

QUESTIONS  ON  THE  TEXT 

1.  Quote  the  "northwestern  farm  woman"  as  to  the  economic  conditions 

of  farmers. 

2.  Show  the  attitude  of  mind  towards  credit  now,  and  formerly,  in  this 

country. 

3.  Show  the  relation  of  capitalistic  agriculture  to  credit:    Size  of  the  Iowa 

farmer's  investment. 

4.  What  is  the  business  corporation's  attitude  towards  credit? 

5.  Cite  Hunt's  statement  on  the  social  significance  of  credit. 

6.  When  did  rural  credit  become  a  public  question  here? 

7.  Quote  at  length  from  President  Taft.    Summarize. 

8.  Distinguish  clearly  between  land  credit  and  cooperative  credit. 

9.  Discuss  our  credit  situation  prior  to  1916. 

10.  Explain  the  beginning  of  cooperative  credit  in  America:   Quebec;  United 

States  (nine  States  with  detailed  account  of  the  North  CaroUna  experi- 
ment):  Herri ck's  criticism. 

11.  Explain  at  length  the  Federal  Farm  Loan  Act. 

12.  Discuss  the  Joint  Stock  Land  Bank. 

13.  What  is  the  social  significance  of  cheap  credit?    From  the  social  stand- 

point, point  out  the  probabilities  and  possibilities  of  this  act. 

14.  State  four  additional  sources  of  mortgage  loans,  and  discuss  in  detail 

Life  Insurance  Companies. 


REFERENCES  185 

15.  Explain  briefly  the  Federal  Reserve  System,  and  in  detail  the  Trade 

acceptance, 

16.  On  a  map  locate  the  12  Federal  Land  Banks. 

17.  What  is  the  average  size  of  a  loan? 

18.  Locate  the  Joint  Stock  Land  Banks. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Show  how  land  laws  in  New  Zealand,  designed  to  help  the  poor,  helped 

the  rich.  Show  whether  it  is  probable  or  improbable  that  our  Federal 
Farm  Loan  Act  will  make  the  rich  farmer  richer  and  the  poor  farmer 
poorer. 

2.  Examine  the  records  of  your  local  Farm  Loan  Association,  and  determine 

the  classes  of  borrowers,  and  the  purposes  for  which  they  borrowed. 
Show  the  individual  benefits  received.     Show  the  social  benefits  (or 
.     injury,  if  any). 

3.  Show  the  possibihties  and  the  hmitations  of  the  North  Carolina  Credit 

Union  plan.    Explain  failure  of  credit  union  idea  in  5  states. 

4.  Secure  from  your  local  banker  samples  of  trade  acceptances. 

REFERENCES 

1.  "Agricultural  Cooperation  and  Rural  Credit  in  Europe,  secured  by 
the  American  and  United  States  Commissions,  1913,"  63  Cong.  1  Sess.  Sen. 
Doc.  214,  same  part  2. 

2.  Cahill,  J.  R.:  "Report  to  the  Board  of  Agriculture  and  Fisheries  of 
an  Enquiry  into  Agricultural  Credit  and  Agricultural  Cooperation  in  Germany, 
with  some  notes  on  German  Live-stock  Insurance,"  London,  1913. 

3.  "Evolution  of  Credit  and  Banks  in  France."  Report  of  National 
Monetary  Commission.    61  Cong.  2  Sess.  Sen.  Doc.  522. 

4.  "Federal  Farm  Loan  Board,  Washington.  First  Annual  Report,  1918. 
Annually  thereafter."    See  also  circulars  issued  irregularly  by  same  Board. 

5.  "German  Bank  Inquiry,  National  Monetary  Commission  Report," 
61  Cong.  2  Sess.  Sen.  Doc.  407. 

6.  Herrick,  Myron  T.:  "How  to  Finance  the  Farmer — Private  Enter- 
prise— not  State  aid,"  64  Cong.  1  Sess.  Sen.  Doc.  396. 

7.  Banker  and  Farmer :  Dealers  in  Pork  and  Beans.  Outlook,  New 

York,  May  2,  1917,  p.  21. 

8.  AND  Ingalls,  R.:    "Rural  Credits — Land  and  Cooperative," 

New  York,  1914. 

9.  "Miscellaneous  Articles  on  German  Banking.  Report  of  National 
Monetary  Commission."    61  Cong.  2  Sess.  Sen.  Doc.  508. 

10.  MoPMAN,  James  B.:  "The  Principles  of  Rural  Credit,"  New  York, 
1915. 

11.  Weir,  E.  A.:  "Rural  Credit  in  Western  Canada."  Grain  Growers 
Guide,  Winnipeg,  March  26,  1919,  p.  25. 

12.  Wolff,  Henry  W.:  "Cooperative  Credit  for  the  United  States." 
New  York,  1917. 

13.  "People's  Bank,"  London,  1910. 

14.  "Cooperation  in  Agriculture,"  London,  1914. 

15.  International  Institute  of  Agriculture,  Rome;  International  Review 
of  Agricultural  Economics:  Italy — "National  Conference  of  Rural  Banks — 
Work  of  the  Italian  Federation,"  May,  1919.  241-250;  Roumania — "Agricul- 
tural credit,"  May,  1917,  49-63;  Gmmn?/— " Landschaf t  of  Piosen,  1914  to 
1916,"  Dec.  1917,  1-9.  "Raiffeisen  Federation  of  Heuwed  in  1914-1915," 
Feb.,  1917,  1-14;  March,  1917,  1-11.  Austria-Hungary — "Agricultural  Credit 
in  Bosnia  and  Herzegovina,"  Feb.,  1917,  55-67;  Denmark — April,  1911,  Jan., 
1913;  Feb.,   1914;  Jan.,   1916;  Jan.,   1917.     i^i^ssm—" Popular  Cooperative 


186  CREDIT 

credit,"  May,  1916,  31-46;  June,  1916,  24-40;  July,  1916,  14-24;  "Popular 
Bank  of  Moscow,"  Nov -Dec,  1918,  861-873.  Uruguay— "Mortgaiges,"  July, 
1918,  565-585;  Jan.,  1917;  65-70.  United  *Stofes—" Organization  of  Credit 
Unions"  (in  9  States,  namely:  Mass.,  N.  Y.,  R.  I.,  Tex.,  S.  C,  N.  C,  Wise, 
Utah,  Ore.).    June-July,  1919,  356-358. 

16.  "Annual  Reports,  on  Savings  and  Loan  Associations,  Land  Bank  of 
the  State  of  New  York,  and  Credit  Unions,"  Superintendent  of  Banks,  Albany. 

17.  "Annual  Reports,  Inspector  of  Ohio  Building  and  Loan  Associations," 
Columbus. 

18.  Rosenthal,  Henry  S.:  "Building,  Loan  and  Savings  Associations: 
How  to  Organize  and  Successfully  Conduct  Them,"  Chicago,  1911,  3d  edition. 

19.  "Annual  Reports,  Rural  Credit  Societies  of  Manitoba,  Parhament 
House,"  Winnipeg. 

20.  "Loans  under  Rural  Credit  Law  of  South  Dakota,  State  Banking 
Department,  Pierre." 

21.  "Loans  under  Rural  Credit  Law  of  North  Dakota,  Monthly  Report, 
Bank  of  North  Dakota,  Bismarck." 

APPENDIX 

The  Twelve  Federal  Land  Banks. — Numbered  by  Districts. — 1.  Springfield, 
Mass.  States  served — Maine,  Massachusetts,  Vermont,  New  Hampshire, 
Rhode  Island,  Connecticut,  New  Jersey,  New  York. 

2.  Baltimore,  Md.  States  served — Pennsylvania,  West  Virginia,  Mary- 
land, Delaware,  Virginia,  District  of  Columbia. 

3.  Columbia,  S.  C.  States  served — North  Carolina,  South  Carolina, 
Georgia,  Florida. 

4.  Louisville,  Ky.    States  served — Indiana,  Ohio,  Kentucky,  Tennessee. 
6.  New  Orleans,  La.    States  served — Louisiana,  Mississippi,  Alabama. 

6.  St.  Louis,  Mo.    States  served — IlUnois,  Missouri,  Arkansas. 

7.  St.  Paul,  Minn.  States  served — North  Dakota,  Minnesota,  Wisconsin 
Michigan. 

8.  Omaha,  Neb.  States  served — Wyoming,  Nebraska,  South  Dakota, 
Iowa.  , 

9.  Wichita,  Kansas.  States  served — New  Mexico,  Kansas,  Colorado, 
Oklahoma. 

10.  Ho  iston  Tex.    State  served — Texas. 

11.  Berkeley,  Calif.    States  served — California,  Nevada,  Utah,  Arizona. 

12.  Spokane,  Wash.  States  served — Idaho,  Washington,  Montana, 
Oregon. 

Federal  Land  Banks.    Loans  Made  up  to  February  1,  1919 

Spokane $25,912,555  St.  Louis $11,830,410 

St.  Paul 24,141,900  Louisville 10,864,000 

Omaha 17,922,140  Berkeley 10,013,200 

Houston 17,394,276  Columbia 8,321,090 

Wichita 16,981,800  Baltimore 6,531,850 

New  Orleans 12,975,415  Springfield 6,225.295 

Total  loans,  $168,213,931;  number  of  borrowers,  71,204;  average  per  loan  $2,362. 


APPENDIX 


187 


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CHAPTER  XII 

TRANSPORTATION 

Transportation,  like  credit,  is  now  one  of  the  vital  forces 
in  agriculture.  It  is  part  of  the  very  life  of  the  agricultural  indus- 
try. The  two,  transportation  and  agriculture,  must  develop 
together,  with  equal  steps,  prospering  together,  suffering  together. 
The  State  itself  would  not  develop  in  a  healthy  and  well-balanced 
manner  without  a  concomitant  development  of  a  well-rounded 
transportation  system.  One  speaker  has  called  the  road  the 
foundation  of  the  State. 

We  have  a  six-fold  transportation  system  at  the  present  time, 
not  counting  the  airship  and  the  submarine.  Our  system,  in  brief, 
includes  transportation  by  ocean,  rail,  lake,  river,  canal,  and  wagon 
road.  And  of  these  six,  the  one  showing  the  highest  degree  of 
development  and  progress  in  the  United  States  is  the  railroad. 

Railroads. — In  the  United  States,  as  in  England — the  two 
countries  where  the  railroad  was  first  and  is  now  best  developed — 
the  railroad  began  as  a  private  institution,  and  so  remained  up  to 
the  time  of  the  World  War.  In  some  foreign  lands,  however,  the 
railroad  is  owned  and  operated  by  the  government.  In  the 
United  States,  when  railroads  were  first  built,  the  accepted  eco- 
nomic theory  was  to  the  effect  that  competition  would  be  adequate 
to  govern  both  service  and  rates.  It  was  discovered,  however, 
that  the  railroad  is  a  natural  monopoly  and  is  therefore  not  gov- 
erned by  competition.  This  left  to  the  government  the  alternative 
of  regulation  or  ownership.  Hence,  in  the  course  of  fifty  or  sixty 
years,  the  government  adopted  the  policy  of  regulation  both  of 
rates  and  services. 

Evils. — Like  any  other  great  institution,  the  railroads  change 
their  business  standards  and  practices  with  the  changes  in  society 
about  them.  In  the  past  the  most  crying  evils  of  the  roads  were 
their  rebates  to  favored  shippers,  their  discriminations  in  freight 
rates  (between  persons,  between  localities,  and  between  commodi- 
ties), and  their  corrupt  participation  in  party  politics.  These 
evils  were  finally  eliminated  or  scotched,  due  to  legislation,  to  the 
administration  of  the  Interstate  Commerce  Commission,  and  to 
the  changing  sense  of  business  honor  among  the  railway  magnates 
themselves.  At  the  present  time,  however,  there  seems  to  be  a 
188 


EVILS  189 

swelling  chorus  of  discontent  against  the  railroads.  Part  of  this 
public  discontent,  as  of  all  popular  dissatisfaction,  is  due  to  the 
ambidextrous  efforts  of  the  ubiquitous  demagog.  A  part  is  based 
on  real  grievances  in  connection  with  the  service  and  the  rates. 
Railroad  rates,  it  may  be  safely  assumed,  will  never  give  popular 
satisfaction,  no  matter  whether  they  are  made  higher  or  lower, 
whether  they  are  made  under  government  or  private  ownership. 
The  chief  grievances  at  the  present  time,  so  far  as  service  is  con- 
cerned," have  to  do  with  two  things,  namely,  the  speed  of  freight 
trains  and  the  supply  of  cars.  The  serious  losses  in  the  transpor- 
tation of  poorly  packaged  freight  has  already  been  mentioned. 

These  two  subjects  have  had  repeated  airings  before  commit- 
tees of  Congress  and  before  State  Railroad  Commissions.  One 
illustration  will  serve  to  show  the  concrete  situation.  At  a  hearing 
before  the  United  States  Senate  Committee  on  Interstate  Com- 
merce in  1908,  on  the  subject  of  Prompt  Furnishing  of  Transpor- 
tation Facilities,  the  largest  live-stock  growers  in  the  United  States 
were  present.  Among  these  was  Murdo  Mackenzie,  one  of  the 
greatest  stockmen  of  North  and  South  America.  Some  of  his 
testimony  ran  as  follows: 

"I  will  first  touch  on  the  shortage  of  cars  and  my  own  experience  in  this 
direction.  A  year  ago  last  fall  I  ordered  cars  from  the  Fort  Worth  and  Denver 
Railroad  for  shipment  to  Kansas  City,  either  over  the  Rock  Island  system  or 
the  Santa  Fe.  I  gave  the  railroad  from  two  to  three  weeks'  notice  to  supply 
the  cars,  and  after  that  time  had  expired,  and  I  had  my  cattle  gathered,  they 
kept  me  from  day  to  day  waiting  for  cars  until  two  months  had  expired  .  .  . 
On  the  15th  of  September,  1907,  I  ordered  cars  for  shipment  to  Kansas  City 
and  St.  Joe,  and  on  the  5th  and  6th  of  October  to  ship  from  the  same  points 
in  the  Pan  Handle.  I  proceeded  to  gather  our  cattle,  and  after  I  had  them 
on  the  trail  for  30  miles,  I  was  only  then  informed  by  the  railroad  that  I  could 
not  get  the  cars.  I  was  compelled  to  turn  the  cattle  back  and  turn  them  loose 
again.  This  was  on  the  18th  of  October.  I  was  informed  by  the  superintendent 
of  the  Fort  Worth  and  Denver  that  there  was  no  hope  for  my  getting  the  cars 
to  ship  over  the  Rock  Island  or  Santa  Fe  before  the  middle  of  December  .  .  . 
I  came  down  to  Chicago  from  home;  I  saw  the  Rock  Island  people  and  the 
Santa  Fe  people.  I  put  my  case  before  them  and  asked  them  if  they  could 
not,  even  on  personal  grounds,  help  me  out.  They  remarked  that  they  could 
not  do  it;  that  they  had  more  business  on  their  own  systems,  a  part  of  which 
runs  through  Texas,  than  they  could  supply  cars  for;  that  they  were  not  going 
to  supply  cars  to  connecting  roads.  Now  here  I  was,  between  the  devil  and 
the  deep  sea,  located  on  the  Fort  Worth  and  Denver  road,  that  is  presumably 
a  road  engaged  in  interstate  commerce.  They  publish  schedules  for  carrying 
our  cattle.  They  refused  to  supply  me  with  cars,  because  they  did  not  want 
to  let  their  cars  go  off  their  own  system,  fearing,  as  they  stated,  that  if  they 
did  so  they  would  not  get  their  cars  back.  The  Rock  Island  would  not  supply 
cars  to  connecting  roads  because  they  had  more  than  enough  to  do  with  their 
cars  on  their  own  system.  Now,  what  is  a  man  going  to  do  who  is  in  this 
kind  of  a  business?  We  have  to  ship  our  cattle.  We  cannot  walk  them,  we 
cannot  put  them  on  the  trail,  as  we  used  to  in  years  gone  past.    We  are  com- 


190  TRANSPORTATION 

pelled  to  ship  them  over  the  roads.  Are  we  to  be  compelled  to  wait  until  the 
season  is  over,  until  our  cattle  are  shrunk,  so  that  we  can  not  get  the  price 
for  them  which  they  would  otherwise  bring?    Or  what  are  we  going  to  do?" 

Murdo  Mackenzie  now  takes  up  the  question  of  the  speed  of 
trains.    He  speaks  in  part  as  follows: 

"Now,  I  have  said  enough  about  the  car  supply.  I  want  to  show  you 
what  speed-  we  get  over  the  railroads.  I  had  a  shipment  of  cattle  in  June 
coming  from  EstelHne,  Texas,  going  up  into  the  northwest.  It  took  me  5^ 
days  to  get  those  cattle  hauled  1000  miles.  The  first  172  miles  took  me  36 
hours  (about  5  miles  an  hour)." 

Mr.  Mackenzie  then  speaks  of  three  other  shipments  of  cattle, 
which  made  the  following  speeds,  respectively:  93^  miles  per 
hour;  7J^  miles  per  hour;  5^:^  miles  per  hour.  He  introduced  as 
evidence  a  letter  from  the  Solicitor  of  the  United  States  Depart- 
ment of  Agriculture  containing  further  material  on  the  average 
speed  of  stock  trains.  In  a  group  of  42  cases  on  one  road,  the 
average  speed  was  93^  miles  per  hour.  In  a  group  of  24  cases  on 
another  road  the  average  speed  maintained  was  12.3  miles  per 
hour.  Other  cases  ran  as  follows:  third  road  (22  cases),  average 
speed  5.4  miles  per  hour;  fourth  road  (28  cases),  10  miles;  fifth 
road  (122  cases),  average  varying  from  1.9  miles  to  15.6  miles 
per  hour;  sixth  road  (14  cases),  6.4  miles;  seventh  road  (15  cases), 
11  miles;  eighth  road  (166  cases),  9.7  miles  per  hour.  In  seven  or 
eight  hundred  cases  the  average  running  time  of  stock  trains  was 
9.4  miles  per  hour. 

An  investigation  of  the  speed  of  freight  trains  carr3dng  potatoes 
in  refrigeration  cars  from  the  region  of  the  Red  River  of  the  North 
to  markets  East  and  South  showed  that  the  average  speed  is 
43i[2  miles  per  hom*. 

Delays  in  freight  shipments  largely  occur  at  sidings  and  junc- 
tion points,  where  other  trains  must  be  met,  and  at  the  city  termi- 
nals, which  are  grossly  inadequate  to  handle  the  business  passing 
through  them.  The  remedy  here  would  involve  not  merely  the 
coordination  and  reconstruction  of  city  terminals,  but  the  double 
tracking  of  all  important  main  lines.  Improvements  of  this  kind, 
however,  as  well  as  the  addition  of  new  rolling  stock  involves 
vast  increases  in  capital  expenditures  on  the  part  of  the  railroads. 
In  the  face  of  this  situation,  it  does  not  seem  likely  that  railways 
can  make  these  increased  outlays  and  at  the  same  time  lower 
rates  on  agricultural  products.  What  way  is  left,  then,  for  the 
American  farmer  to  secure  better  rates  and  services? 

Some  light  on  this  question  comes  to  us  from  England,  where 
a  similar  system  of  private  ownership  prevails.     The  British 


RAILROADS  AND  THE  FARMER  191 

farmers  felt  aggrieved  to  learn  that  the  British  railroads  were 
carrying  large  quantities  of  foreign  eggs  at  lower  rates  than  the 
British  farmer  was  paying  for  sending  his  own  eggs  to  market. 
This  seemed  Hke  a  bad  case  of  discrimination.  The  individual 
English  farmer,  with  his  comparatively  small  supply,  forwarded 
his  eggs  to  market  from  day  to  day  in  small  consignments.  The 
foreign  eggs  came  in  in  large  lots.  One  of  the  English  railway  com- 
panies replied  to  the  National  Poultry  Organization  Society's 
request  for  lower  rates  in  this  fashion: 

"If  you  will  only  send  us  eggs  in  4-ton  lots,  as  against  the 
very  much  larger  quantities  we  received  from  abroad,  we  will 
give  you  a  rate  which  will  be  25  per  cent  lower  than  we  get  as  our 
share  of  the  through  rate  charged  to  the  foreigner."  The  offer 
was  declined,  because  the  farmers  were  not  yet  ready  to  deliver 
this  volume  of  business.  When  these  farmers  are  able  to  deliver 
this  amount  of  business  with  some  certainty  both  as  to  the  volume 
and  the  regularity  of  delivery,  they  will  be  able  to  secure  service 
and  rates  on  the  most  favorable  terms  possible.  We  have  already 
seen,  in  the  case  of  the  Warren  County  (Kentucky)  Strawberry 
Growers,  that  as  soon  as  they  could  guarantee  quantity  and  time 
of  shipment,  adequate  transportation  service  was  forthcoming. 

Railway  Finance. — American  railroads  are  capitalized  at  much 
lower  figures  than  railroads  in  foreign  lands.    Here  is  the  situation : 

American  railroads  are  capitalized  at $  60,000  a  mile 

British  railroads  are  capitalized  at 275,000  a  mile 

French  railroads  are  capitalized  at 141,000  a  mile 

German  railroads  are  capitalized  at 112,000  a  mile 

On  the  other  hand  wages  are  higher  in  America  than  in  foreign 
lands. 

Average  pay  of  American  railway  employe  (before  the  war)  $668  per  year 

Average  pay  of  British  railway  employe  (before  the  war) .  .  251  per  year 

Average  pay  of  French  railway  employe  (before  the  war) . .  260  per  year 

Average  pay  of  German  railway  employe  (before  the  war) . .  382  per  year 

Average  pay  of  Austrian  railway  employe  (before  the  war)  .  260  per  year 

And  the  freight  rates  are  much  lower  in  America.  Here  are 
the  figures: 

Average  charge  for  hauling  ton  of  freight  (before  the  war)  100  miles: 

United  States $0.75 

England 2.80 

France 2.20 

Germany 1.64 

Austria 2.30 

Railroads  and  the  Farmer. — The  railroads  are  devoting  a  great 
deal  of  attention  to  the  subject  of  agriculture.  Their  reason  is 
frankly  a  selfish  one — to  make  more  prosperity  for  the  railroad. 
The  roads  with  a  federal  land  grant  were  interested  in  selling  this 
land.     These  grants  amounted  to  115,500,000  acres.     All  roads 


192  TRANSPORTATION 

derive  considerable  freight  traffic  from  agricultural  products  and 
from  products  sold  to  the  farmer.  The  five  chief  methods  now 
employed  by  the  railroads  in  aiding  agricultural  progress  are  these: 
(1)  Securing  new  settlers;  (2)  Agricultural  education;  (3)  Marketing 
cooperation;  (4)  Supply  of  farm  labor;  (5)  Forestry  and  land- 
scape gardening. 

(1)  Securing  New  Settlers.— Many  railroads  now  have  an 
official  called  ''immigration  agent"  whose  duty  it  is  to  bring 
settlers  from  the  crowded  sections  of  the  United  States  to  the 
sparsely  settled  parts.  A  few  decades  ago  settlers  were  brought 
largely  from  foreign  countries.  Thus  the  Santa  Fe  solicited 
settlers  from  Germany  in  the  seventies.  In  Barton  County, 
Kansas,  along  this  line,  there  were  2  persons  of  foreign  birth  in 
1870;  in  1880  there  were  2,216  foreigners  here.  Similarly  in  Marion 
County,  Kansas.  Here  the  Russian  Mennonites  were  brought  in. 
In  1880  there  were  2  in  Marion  County;  in  1890  there  were  3,116. 
A  later  illustration  can  be  given  for  North  Dakota.  The  Great 
Northern  railroad  made  a  systematic  attempt  to  bring  in  American 
farmers,  opening  its  campaign  in  the  State  of  Indiana,  and  making 
Cando,  North  Dakota,  the  objective  point  of  settlement.  On 
March  21,  1893,  a  party  of  300  men,  women  and  children,  in  a 
special  passenger  train,  left  Walkerton,  Indiana,  for  Cando, 
North  Dakota.  The  household  goods  of  these  settlers  came  along 
in  a  special  freight  train  of  forty  cars.  It  is  estimated  that  the 
movement  from  the  central  states  rapidly  increased  in  the  following 
years,  reaching  1800  the  first  year,  and,  after  some  ten  years, 
averaging  20,000  a  year. 

(2)  Agricultural  Education. — In  this  line  of  endeavor  the  rail- 
roads are  now  generally  cooperating  with  the  State  and  Federal 
governments.  For  instance,  instruction  trains  are  a  good  example 
of  this  form  of  cooperation.  A  ''Better  Farming  Special '*  is  sent 
out  by  one  road,  including  cars  and  coaches  equipped  so  as  to 
take  the  best  ideas  of  the  Agricultural  College  to  the  farmers. 
Certain  cars  are  equipped  with  live  stock,  heavy  horses,  beef  and 
dairy  cattle,  poultry,  swine,  and  sheep,  while  other  cars  contain 
illustrative  and  demonstrative  material  relating  to  seed  improve- 
ment, identification  of  weeds,  drainage,  alfalfa,  silage,  insects, 
dairying,  poultry  raising,  bacteriology,  etc.  This  is  merely  a 
sample  of  the  work  being  done  by  many  of  the  railroads.  With 
these  trains  go  lecturers  and  demonstrators.  The  country  folk 
come  in  many  miles  to  attend  the  lecture  or  demonstration. 
Some  "Better  Farming  Specials"  devote  their  whole  attention 


MARKETING  SERVICE 


193 


to  one  topic,  such  as  beef  cattle.  Railroads  also  employ  agricul- 
tural experts  to  visit  the  farms  and  instruct  the  farmers.  Some 
roads  maintain  demonstration  farms,  or  maintain  demonstration 


Fig.  34. — Beans  in  hampers,  loading  not  properly  braced. 


t  iG.  35. — Cucumoers  snouici  not  be  loaded  in  a  hamper. 


plots  on  private  farms.     Prizes  are  given  for  farm  products  or  for 
live-stock  production. 

(3)  Marketing   Service. — One  large  railroad  system  employs 
men  experienced  in  produce  marketing,  and  sends  them  among  the 
13 


194  TRANSPORTATION 

farmers  and  advises  them  as  to  how  and  where  to  sell  produce. 
Other  roads  help  organize  the  farmers  into  cooperative  associations 
and  give  them  instructions  on  packing  and  grading,  showing  the 
need  of  the  standardized  pack.  One  of  the  greatest  preventable 
leaks  in  our  marketing  system  is  the  loss  in  shipping  foodstuffs  in 
frail  and  insecure  containers  or  in  containers  not  properly  loaded. 
The  accompanying  figures  illustrate  this  loss  (Figs.  34,  35,  and  36). 
(4)  Supply  of  Farm  Labor. — Some  roads  now  cooperate  with 
the  State  departments  of  agriculture  in  supplying  labor  for  jobs 
and  jobs  for  labor.    The  railroad  works  largely  through  its  local 


Fia.  36. — Potatoes  in  barrels  loaded  on  bilge  and  no  head  liners  used. 

ticket  agent.  The  local  agent  is  in  touch  with  the  farmer,  on  the 
one  hand,  and  with  the  central  office  on  the  other.  He  receives 
the  farmer's  application  for  hiring  help;  he  also  learns  of  places 
on  the  farm  for  labor.  The  central  office  of  the  railroad  collects 
and  classifies  the  applications  and  reports,  and  presents  them  in 
quantities  to  the  State  officials. 

(5)  Forestry  and  Landscape  Gardening. — One  railroad  has  put 
1,000,000  acres  under  systematic  forestry  management.  Another 
railroad  has  planted  a  large  acreage  to  trees,  including  the  follow- 
ing trees:  red  oak,  2,067,529;  locust,  1,915,235;  Scotch  pine, 
371,711;  European  larch,  47,045;  Norway  spruce,  46,500;  catalpa, 
40,605;  pin  oak,  26,220;  white  pine,  14,372;  black  walnut,  10,885; 
other  species,  27,524;  making  a  total  of  4,617,626  trees.  Railroads 
also  contribute  money  and  services  in  the  work  of  prevention  of 
forest  fires.    Landscape  gardening  is  carried  on  about  the  railway 


EXPRESS  BUSINESS  195 

stations  of  some  roads,  under  the  supervision  of  an  expert  in  this 
Hne.  This  encourages  ornamental  gardening  in  the  villages  and 
cities  along  the  road.  Some  roads  maintain  nurseries  in  the  prairie 
states,  where  young  trees,  fitted  to  the  chmate,  are  sold  at  very 
low  prices  to  farmers.  Farmers  are  encouraged  to  plant  such 
trees  as  will  protect  and  beautify  their  farmstead. 

It  is  to  be  earnestly  hoped  that  the  railroads  will  develop  two 
additional  lines  of  cooperation  with  farmers  in  certain  wide  sections 
of  the  country.  (1)  Crude  material  for  road  building,  such  as  gravel, 
is  lacking  in  many  sections  and  can  only  be  shipped  in  at  prohibit- 
ive costs.  (2)  Farm  labor  cannot  flow  to  the  fields  where  needed 
owing  to  heavy  charges  for  passenger  fare.  These  two  situations 
should  be  understood  and  adjusted  by  the  railroad  companies. 

Express  Business. — ^The  express  companies  utilize  all  forms  of 
transportation.  They  have  grown  into  their  present  position  of 
prominence  and  power  by  rendering  a  special  kind  of  service.  The 
historical  growth  of  these  companies  is  interesting.  The  federal 
government  has  published  a  special  census  report  on  this  subject, 
prepared  by  R.  H.  Snead,^  from  which  the  following  information 
is  gleaned. 

The  beginning  of  the  express  business  goes  back  to  1839,  when 
one  William  F.  Harnden,  valise  in  hand,  made  four  trips  a  week 
between  New  York  and  Boston  carrying  valuables  and  small 
packages  for  his  customers.  There  was  a  demand  on  the  part  of 
the  public  for  such  a  service,  consequently  a  number  of  small 
companies  were  soon  engaged  in  express  business.  The  American 
Express  Company  was  formed  in  1850;  in  1854  there  were  formed 
the  United  States  and  the  Adams  Express  Companies.  An  express 
company,  says  one  writer,  purchases  the  right  of  transportation 
at  wholesale  and  sells  it  at  retail.  In  addition  to  transportation, 
calling  for  packages,  and  delivery  of  packages,  the  express  com- 
panies now  render  among  other  services  the  following :  issue  money 
orders  and  letters  of  credit;  exchange  foreign  money;  enter  and 
clear  goods  at  custom  houses. 

"Ever  on  the  alert  to  extend  its  business,  long  before  the  railroad  reached 
a  new  section  of  the  country,  an  express  company  would  have  an  estabUshed 
service  by  means  of  stage  or  pack  animals.  Indeed,  no  more  romantic  or 
interesting  figures  are  to  be  found  in  the  history  of  the  West  than  the  Pony 
Express  Riders,  who  carried  letters  and  valuables  across  half  a  continent." 

Railroad  companies  now  furnish  and  haul  the  necessary  cars 
for  the  express  business  on  the  contract  basis,  the  express  company 

^  Bureau  of  Census.  Special  Report  Express  Business  in  the  United 
States,  1907. 


196  TRANSPORTATION 

paying  a  per  cent  of  its  gross  earnings.  While  there  are  now  34 
express  companies  operating  in  the  United  States,  only  six  of  them 
are  large  companies.  The  original  investment  in  this  business  was 
small.  While"  the  six  large  concerns  have  assets  of  $85,613,809, 
only  $6,267,184  represents  equipment  and  fixtures  used  in  the 
express  business.  The  balance  of  the  assets  consists  largely  in  the 
investments  purchased  out  of  surplus  earnings.  These  investments 
are  largely  in  railroads  and  in  other  express  companies.  The  six 
big  companies  have  90  per  cent  of  the  assets  of  the  34  companies. 

Express  rates  are  graduated  according  to  weight  of  package 
and  distance  carried.  Since  the  enactment  of  the  Federal  Parcels 
Post  law  the  rates  have  been  put  on  a  competitive  basis  with  the 
post  office. 

Parcels  Post. — Like  the  express  business,  the  parcels  post  now 
operates  over  transportation  routes  of  all  kinds.  The  Post  Office 
Department  is  making  a  campaign  of  publicity  in  order  to  popular- 
ize and  to  increase  the  service  now  rendered  by  the  parcels  post. 
Exhibits  are  held  at  the  various  State  fairs.  Thirty-five  important 
cities  of  the  country  were  selected  for  a  more  thorough  and  inten- 
sive campaign,  the  immediate  aim  of  which  was  to  foster  direct 
marketing  between  farmer  and  city  housekeeper.  The  postmasters 
prepare  and  circulate  lists  of  producers  and  lists  of  consumers. 

What  service  does  the  parcels  post  actually  render?  In  one 
sense  it  is  very  much  like  the  express  business,  except  that  the 
weight  limit  is  imposed  in  the  parcels  post  but  not  in  the  express 
business.  Both  have  a  delivery  service  in  cities  of  a  size  to  justify 
it.  Both  transport  highly  perishable  commodities  and  the  cost 
is  very  much  the  same,  both  using  a  zone  system.  The  growth 
of  the  parcels  post  has  been  encouraging,  although  not  up  to  the 
high  expectations  of  some  of  its  enthusiastic  friends.  Containers, 
strong,  light,  and  cheap,  have  been  developed  by  private  commer- 
cial concerns,  thus  overcoming  one  of  the  initial  weaknesses  of 
the  system.  Fresh  eggs  may  now  be  shipped  a  thousand  miles  by 
parcels  post  with  comparative  safety.  In  short,  the  physical 
difficulties  of  parcels  post  marketing  have  been  overcome.  There 
remain  only  the  business  difficulties.  But  these  have  proved  the 
hardest  to  overcome.  The  first  difficulty  is  the  agreement  on 
price.  The  farmer's  wife  was  selling  butter  at  the  country  store 
at  20  cents  a  pound,  but  wanted  50  cents  a  pound  when  sent  by 
parcels  post  to  the  city.  Credit  arrangements  are  also  difficult 
to  make.  The  city  housewife  does  not  want  to  pay  cash  in  advance 
for  goods  she  has  not  seen  and  about  whose  quantity,  quality, 


RIVER  AND  CANAL  197 

and  time  of  arrival  she  is  uncertain.  Neither  does  the  farmer  want 
to  forward  goods  to  a  stranger  who  may  reject  them  or  may  fail 
to  pay  for  them.  Parcels  post  marketing  thus  means  entirely 
new  business  habits  on  the  part  of  the  public  who  may  use  it. 
This  process  will  take  time,  much  time. 

Interurban  Electric  Lines. — Certain  sections  of  the  country, 
such  as  that  about  IndianapoHs,  for  instance,  suggest  the  proba- 
bility of  a  great  development  of  electric  lines  as  freight  and  pas- 
senger carriers  from  country  to  city.  The  initiative  for  such  Knes 
seems  to  come  entirely  from  the  city  end.  It  would  seem  feasible 
for  farmers  themselves  to  organize  corporations  and  construct 
their  own  lines  in  case  their  community  is  not  already  adequately 
served.  This  form  of  transportation  is  yet  in  its  early  stages, 
but  is  full  of  promise  for  the  future. 

Lake  Transportation. — ^While  there  are  numerous  lakes  in  the 
United  States  employed  in  transportation  of  passenger  and  goods, 
yet  these  all  dwarf  into  insignificance  in  comparison  with  the  traffic 
borne  on  the  Great  Lakes.  There  is  no  more  important  highway 
of  commerce  in  the  world  than  the  chain  of  northern  lakes.  One 
aspect  of  this  economic  condition  is  the  phenomenal  growth  of  the 
large  cities  situated  on  the  shores  of  the  Great  Lakes.  While 
lumber,  coal,  and  iron  ore  figure  prominently  in  this  lake  traffic, 
yet  grain  is  one  of  the  commodities  of  first  importance. 

A  large  share  of  our  surplus  grain  is  produced  in  the  region 
tributary  to  the  Great  Lakes.  The  transportation  facilities  of 
this  waterway  have  given  better  and  cheaper  service  than  is 
possible  by  rail.  A  large  freight  vessel,  loading  in  bulk  from  an 
elevator  in  Duluth  will  load  300,000  bushels  of  wheat  in  three 
hours.  Some  of  the  larger  boats  carry  over  400,000  bushels. 
Freight  rates  by  water,  like  freight  rates  by  rail,  have  tended 
downward  for  the  last  forty  years.  The  average  rate  on  wheat 
from  Chicago  to  Buffalo  by  lake  was,  in  1901,  one-fourth  of  what 
it  was  in  1871.  The  all-rail  rate  on  wheat,  Chicago  to  New  York, 
was  in  1901  only  forty  per  cent  of  what  it  was  in  1871. 

In  1871  the  rate  on  wheat  per  bushel  by  lake  from  Chicago  to 
Buffalo  was  6.3  cents.  In  1909  the  average  rate  was  1.4  cents. 
The  water  rate  fluctuates  from  day  to  day,  with  the  supply  and 
demand  of  vessels.  The  rail  rate  is  about  twice  the  average 
lake  rate. 

River  and  Canal. — There  is  little  to  be  said  on  this  subject 
at  the  present  time.  Once  our  inland  boat  service  was  an  impres- 
sive thing.    Now  these  canals  are  almost  as  extinct  as  the  stage 


198  TRANSPORTATION 

coach  and  the  ox  cart.  The  Erie  Barge  Canal  is  a  disappointment. 
The  Ohio  and  Mississippi  Rivers  do  float  some  commerce,  but  it  is 
mere  dust  in  the  balance  compared  to  the  traffic  borne  by  the  rail- 
roads that  parallel  their  banks.  Steamboat  traffic  on  the  Missouri 
River,  once  important,  may  now  be  pronounced  dead.  Aside  from 
a  few  especially  favored  cities,  Hke  Washington,  St.  Louis  and  New 
Orleans,  the  ordinary  American  River  city  derives  Uttle  or  no 
transportation  benefits  from  its  river. 

The  river  is  a  pubhc  highway.  Any  person,  even  with  small 
capital,  can  enter  the  competition  thereon.  Yet  the  field  remains 
practically  unoccupied,  while  the  railroads  continue  to  handle  the 
traffic.  The  pubHc  are  doubtless  a  little  slow  to  take  a  serious 
and  hopeful  interest  in  river  improvement  since  for  a  long  period 
of  years  the  worst  ''Pork  Barrel"  legislation  of  the  United  States 
Congress  has  centered  about  the  appropriation  for  ''Rivers 
and  Harbors."  Doubtless  this  mishandling  of  an  important 
matter  has  set  back  the  cause  of  real  river  improvement  a  good 
many  years. 

Good  Roads. — The  term  "Good  Roads"  is  now  coming  to  be 
applied  to  improved  country  highways.  The  implication  is  that 
ordinary  country  roads  are  not  good  roads.  In  other  words,  we 
are  just  now  developing  a  road  system  which  compares  favorably 
with  the  good  roads  of  European  countries.  For  many  decades 
the  roads  in  rural  America  were  left  to  the  strictly  local  units  of 
government  as  one  of  their  sacred  "functions."  In  practice  this 
meant  that  roads  were  rarely  constructed  with  scientific  or  per- 
manent improvements,  but  were  generally  left  in  a  "state  of 
nature."  True,  the  owners  of  adjoining  farms  were  permitted  to 
"work  the  roads"  once  a  year  in  Heu  of  paying  their  so-called  road 
tax.  This  farcical  performance  is  now  happily  extinct  except  in  a 
few  backward  and  hidebound  communities.  With  the  coming  of 
the  automobile  to  both  city  and  country,  the  farmer  and  the  city 
dweller  are  both  of  the  same  opinion  as  to  good  roads,  namely, 
that  State  and  national  systems  of  highways  are  a  necessity. 
Hence  to-day  we  have  the  various  transcontinental  highways, 
such  as  the  Lincoln  Highway  east  and  west,  the  Jefferson  Highway 
north  and  south,  and  many  other  great  trunk  highways;  we  have 
also  the  federal  office  of  good  roads  and  a  huge  federal  appropria- 
tion to  subsidize  State  highway  systems;  we  have  also  in  most  of 
the  States  a  central  commission  or  board  of  engineers  in  adminis- 
trative charge  of  the  construction  and  repair  of  public  roads.  Cen- 
traUzed  administration  is  bearing  good  fruit.    Big  transportation 


RURAL  MOTOR  EXPRESS 


199 


costs,  formerly  thought  of  solely  in  connection  with  railroads, 
are  now  seen  to  go  with  the  local  haul  on  the  country  roads  (Fig. 
37).  An  expert  in  transportation  in  the  Department  of  Agriculture 
published  some  statistics  in  1906,  comparing  costs  of  hauling 
cotton  and  wheat  from  farms  to  shipping  point,  hauling  on  the 
railway,  and  the  ocean  haul.  The  average  local  haul  of  cotton — 
farm  to  shipping  point — was  11.8  miles,  and  cost  16  cents  per  100 
pounds  for  this  haul;  for  wheat  the  average  local  haul  was  9.4 
miles,  and  the  cost  of  this  haul  was  9  cents  per  100  pounds  (5.4 
cents  per  bushel).  The  railway  charge  for  hauling  to  seaboard 
was  40  cents  per  100  pounds  of  cotton  and  20  cents  per  100  pounds 


Fia.  37. — Transportation  by  wagon  road  as  seen  in  Russia. 

of  wheat.  The  ocean  carry  was,  of  course,  far  the  cheapest.  Thus 
England  took  3,000,000  bushels  of  wheat  in  1905  by  saihng  vessel 
from  Puget  Sound,  down  the  west  coast  of  America  and  around 
Cape  Horn,  a  voyage  of  15,000  miles.  The  average  charge  for  car- 
rjdng  wheat  to  England  for  the  year,  the  hauls  varying  from  3000 
to  15,000  miles,  was  9  cents  a  bushel,  or  only  one  and  two-thirds 
times  the  cost  of  hauling  nine  miles  over  a  country  road. 

Rural  Motor  Express. — That  country  roads  are  soon  to  be 
important  factors  in  transportation  is  now  evidenced  by  the  train 
of  huge  motor  trucks  that  carry  freight  between  important  urban 
centers  in  the  eastern  part  of  the  United  States.  The  railroad  is 
destined  to  be  used  principally  for  the  long  haul.  Motor  vehicles 
operating  over  graded  and  surfaced  highways  will  be  the  feeders 


200 


TRANSPORTATION 


for  the  railways.    With  a  dense  population  the  greater  part  of  the 
farm  produce  is  consumed  within  the  range  of  the  short  haul. 


Fig.  38. — The  motor  truck  at  onion  and  celery  farm  of  Hartville,  Ohio,  being  loaded.    Ship- 
ments are  carried  to  Pittsburgh,  Pa. 


.^'•*««Sf^;^, 


Fig.  39. — Farmers  at  Harford  County,  Md.,   delivering  milk  to  roadside  platforms  from 
which  it  is  taken  to  the  city  dairies  by  the  farmers'  cooperative  trucks. 

It  will  manifestly  be  economical  for  the  motor  vehicle  to  haul  this 
local     produce    for     local     consumption     (Figs.     38     and     39). 


OCEAN  TRANSPORTATION  201 

The  value  of  good  roads  to  the  farmer  is  manifest  in  many- 
ways.  For  instance,  travelers  along  the  famous  pike  in  Indiana 
known  as  the  Michigan  Road  years  ago  noted  the  spirit  of  pride 
farmers  along  this  road  took  in  the  upkeep  of  their  farmsteads. 
The  fences  were  woven  wire,  in  contrast  with  the  rail  fences  just 
off  the  pike;  the  barns  were  painted,  and  usually  had  the  farmer's 
name  or  his  farm  name  in  big  letters  on  the  roof;  the  houses  and 
lawns  showed  that  the  esthetic  sense  of  the  farmer  and  farmer's 
wife  appreciated  beauty.  Farm  life  had  become  more  dignified.  The 
social  value  of  good  roads  in  annihilating  isolation  is  easy  to  com- 
prehend, but  difficult  to  measure.  Many  serious  efforts  have  been 
made  to  measure  the  economic  value  of  good  roads  as  a  factor 
in  raising  land  values.  The  Federal  Office  of  Good  Roads  and 
Rural  Engineering  made  surveys  in  eight  counties  in  five  States 
for  a  period  covering  six  years,  1910  to  1915  inclusive.  The  study 
revealed  the  interesting  fact  that  following  the  improvement  in 
the  highways,  the  selling  price  of  the  adjoining  land  amounted  to 
from  one  to  three  times  the  cost  of  the  improvements.  These 
studies  were  conducted  in  the  following  States:  Virginia,  New 
York,  Alabama,  Mississippi,  and  Florida.  In  Franklin  county. 
New  York,  the  figures  seem  to  indicate  that  the  change  from  earth, 
sandy  and  loam  roads  to  bituminous  macadam  was  followed  by 
increases  averaging  $12.50  per  acre,  or  about  30.7  per  cent.  The 
economic  value  of  good  roads  includes  other  factors  than  increased 
land  values,  such  as  lessened  wear  and  tear  on  vehicles,  harness 
and  teams,  increase  in  size  of  load  hauled,  and  decrease  in  time 
consumed  in  haufing. 

Ocean  Transportation. — At  the  opening  of  the  World  War  in 
1914  ocean  transportation  afforded  a  good  example  of  the  economic 
theory  of  competition.  In  other  fields  of  transportation  govern- 
ments had  gradually  come  to  set  aside  the  competitive  system  as 
a  regulator  of  rates  and  services. 

A  Royal  Commission  in  Great  Britain  appointed  in  1909,  and 
the  Committee  on  the  Merchant  Marine  and  Fisheries  of  the 
United  States  House  of  Representatives,  under  House  Resolution 
587,  passed  in  June,  1912,  both  investigated  the  workings  of  com- 
petition in  ocean  shipping,  and  both  reached  the  same  conclusion. 
Competition  has  destroyed  competition.  A  summary  of  the  facts 
found  by  the  United  States  investigators  is  as  follows: 

First — that  the  evils  arising  from  former  unrestricted  competi- 
tion in  ocean  carriage  have  driven  the  steamship  companies  to 
form  understandings,  conferences,  combinations,  ''rings." 


202  TRANSPORTATION 

Second — that  these  combinations  and  rings  have  led  to  the 
formation  of  great  shipping  trusts.  These  trusts  control  not 
only  the  lines  directly  owned  by  them,  but  also  control,  to  a  great 
extent,  the  traffic  of  the  tramp  ships,  which  gives  them  a  power- 
ful monopoly. 

Third — that  these  monopolies  give  rise  to  and  maintain  exces- 
sive and  unjust  rates,  and  by  use  of  ''fighting  ships"  and  by 
rebates  to  large  shippers,  tend  also  to  bring  forth  other  and  danger- 
ous monopolies,  monopolies  in  buying  and  monopolies  in  selUng. 

Competition  is  spoken  of  in  these  words: 

"Unrestricted  competition,  based  on  the  survival  of  the  fittest, 
tends  to  restrict  the  development  of  the  lines,  and  in  the  end  must 
result  in  monopoly  .  .  .  Competition  in  the  steamship  business 
was  regarded  as  the  demoralization  rather  than  the  life  of  trade; 
as  the  means  of  introducing  uncertainty  instead  of  certainty,  and 
inefficiency  instead  of  efficiency."  The  steamship  companies  ad- 
vanced this  statement,  on  the  same  subject:  ''Competition  has 
never  established  a  reasonable  rate  nor  maintained  a  stable  rate 
.  .  .  Rate  wars  tend  to  the  monopolization  of  trade  by  the  larger 
shippers.  Unless  the  warring  steamship  factions  come  to  some 
agreement,  the  result  is  more  or  less  of  a  monopoly  on  the  part 
of  the  most  powerful  carrier  engaged  in  the  conflict." 

These  rings  gave  stability  to  rates  on  high-priced  freight.  But 
these  rings  did  not  cover  heavy  bulk  traffic,  such  as  grain,  flour, 
oil  cake,  cotton,  and  similar  commodities.  The  "package  traffic" 
(the  high-priced  freight)  constituted  22  per  cent  of  the  tonnage, 
while  the  bulk  traffic  constituted  78  per  cent.  That  is,  78  per  cent 
of  the  tonnage,  unregulated  by  agreements,  consisted  mainly  in 
the  staples  of  agriculture.  On  the  staples,  ocean  freight  rates 
varied  not  merely  from  month  to  month,  but  from  day  to  day  and 
from  hour  to  hour.  This  introduced  an  element  of  risk,  which  in 
turn  necessarily  reflected  itself  in  the  price  of  the  commodity. 
In  other  words,  the  foreign  buyer  or  American  exporter  would  be 
forced  to  hedge  his  risk,  so  far  as  possible,  by  paying  a  lower  price 
for  the  commodity. 

The  situation  is  beyond  the  reach  of  any  one  nation.  An 
International  Commerce  Commission,  strongly  urged  by  Hon. 
David  Lubin,  Delegate  of  the  United  States  to  the  International 
Institute  of  Agriculture  at  Rome,  offers  one  feasible  solution  to 
the  problem. 

The  World  War  brought  a  new  element  into  the  situation, 
when  the  United  States  entered  the  field  of  ocean  transportation. 


QUESTIONS  SUGGESTED  BY  THE  TEXT  203 

But  whether  this  activity  on  the  part  of  the  United  States  govern- 
ment is  to  be  permanent  or  temporary  is,  at  the  present  writing, 
in  doubt. 

The  World  War  also  caused  the  United  States  to  take  possession 
of  the  railroads,  and  to  operate  them  as  a  unit.  The  law  provided 
that  this  government  control  should  cease  within  21  months  after 
peace  was  declared.  The  government  made  the  single  dominating 
principle  of  its  operation  of  the  road  the  winning  of  the  war;  con- 
sequently service  to  private  shippers  was  strenuously  curtailed; 
rates  were  greatly  increased;  costs  of  operation  were  enormously 
increased  by  reason  of  wage  increases.  In  short,  the  pubUc  paid 
more  and  got  less.  While  the  war  was  in  progress  the  pubHc 
cheerfully  acquiesced  in  this  condition  on  the  ground  that  any 
sacrifice  was  worth  while  so  long  as  it  contributed  towards  victory. 
With  the  coming  of  peace,  however,  the  public  demand  was  irre- 
sistible that  the  roads  be  returned  to  private  ownership. 

QUESTIONS  ON  THE  TEXT 

1.  Show  the  fundamental  importance  of  transportation. 

2.  Name  the  six  elements  in  our  transportation  system. 

3.  What  economic  theory  first  prevailed  concerning  our  railroads?     Show 

failure  of  this  theory. 

4.  State  the  evils  in  connection  with  early  railroad  operations.     What  is 

the  present  status? 

5.  What  are  the  two  main  grievances  now  against  railroads? 

6.  Summarize  the  testimony  of  Murdo  Mackenzie. 

7.  Summarize  conclusions  as  to  speed  of  freight  trains.    Explain  these  delays. 

State  remedy. 

8.  Cite  British  experience. 

9.  Comment  on  railroad  capitahzation  and  freight  rates  here  and  abroad. 

10.  Show  relation  of  railroad  to  farmer  in  six  important  respects. 

11.  Name  two  additional  activities  needing  attention. 

12.  Discuss  at  length  the  express  business. 

13.  Show  growth,  success,  and  limitations  of  the  Parcels  Post. 

14.  Show  status  and  prospects  of  the  Interurban  Electric  service. 

15.  Comment  at  length  on  lake  transportation. 

16.  Describe  and  account  for  status  of  river  and  canal  transportation. 

17.  Describe  in  detail  the  Good  Roads  movement  in  this  country.    Compare 

haulage  costs  on  country  roads,  railroads,  and  ocean. 

18.  Show  the  Rural  Motor  Express  situation. 

19.  Comment  at  length  on  value  of  good  roads  to  the  farmer. 

20.  Show  how  the  theory  of  competition  worked  out  in  ocean  transportation. 

21 .  What  action,  if  any,  should  the  government  take  as  to  ocean  transportation? 

22.  Show  what  effects  the  World  War  had  on  American  railway  transportation. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Prepare  a  chart  showing  the  amount  of  federal  aid  to  good  roads  allotted 

to  each  State. 

2.  Would  it  not  be  as  logical  for  a  farmer  to  work  out  his  school  tax  by  teaching 

in  the  local  school  house  a  few  days,  as  to  work  out  his  road  tax? 


204  TRANSPORTATION 

3.  Prepare  a  chart  showing  main  highways  across  the  United  States. 

4.  Prepare  a  chart  showing  main  Rural  Motor  Express  lines  in  your  State. 

(Consult  National  Automobile  Chamber  of  Commerce,  7  East  42d  Street, 
New  York  City.) 

5.  What  solution  have  you  for  the  railroad  problem  in  the  United  States? 

REFERENCES 

1.  Andrews,  Frank:  ''Freight  Costs  and  Market  Values.  Yearbook  of 
the  Department  of  Agriculture,"  1906. 

2.  :  "Grain  Movement  in  the  Great  Lakes  Region."  United  States 

Department  of  Agriculture,  Bureau  of  Statistics,  Bulletin  81,  Washington, 
Nov.,  1910. 

3.  :     "Railroads  and  Farming.     Some  Influences  Affecting  the 

Progress  of  Agriculture,"  United  States  Department  of  Agriculture,  Bureau 
of  Statistics,  Bulletin  100;  Washington,  October,  1912. 

4.  — — — ■:  "Inland  Boat  Service,  Freight  Rates  on  Farm  Products  and 
Time  of  Transit  on  Inland  Waterways  in  the  United  States,"  Bulletin  74, 
United  States  Department  of  Agriculture,  Washington,  December,  1914. 

5.  "Comparison  of  Capital  Values — Agriculture,  Manufactures,  and  the 
Railways."    Bureau  of  Railway  Economics,  Bulletin  39,  Washington,  1912. 

6.  Elliott,  Howard:  "Relation  Between  the  Farmer  and  the  Railroad." 
Address  at  the  Tri-State  Grain  and  Stock  Growers  Association,  Fargo,  N.  D., 
January  17,  1912.  (Mr.  Elhott  was  at  that  time  president  of  the  Northern 
Pacific  Railway.) 

7.  LuBiN,  David:  "Proposal  for  an  International  Conference  on  the 
Regulation  and  Control  of  Ocean  Carriage."  International  Institute  of  Agri- 
culture, Rome,  1914. 

8.  :    "Is  not  ocean  carriage  a  public  utility?    If  so  should  it  not 

be  under  pubhc  control"?     International  Institute  of  Agriculture,  Rome, 
December,  1916,  No.  35. 

9.  McPherson,  Logan  G.:  "The  Farmer,  the  Manufacturer  and  the 
Railroad."    North  American  Review,  New  York,  November,  1907. 

10.  "Prompt  Furnishing  of  Transportation  FaciHties.  Hearings  Before 
the  Committee  on  Interstate  Commerce,  United  States  Senate,"  February 
21    1908 

11.  "Railways  and  Agriculture,"  1900-1910.  Bulletin  45,  Bureau  of 
Railway  Economics,  Washington,  1913. 

12.  Sne AD,  Russell  H. :  "Express  Business  in  the  United  States."  Bureau 
of  the  Census.    Special  Reports,  Washington,  1907. 

13.  "Industrial  Commission  Report,"  Vol.  4,  5-109;  Vol.  9,  LXXXII, 
XC,  CCLXXXV. 

14.  Yearbook  Department  of  Agriculture :  1899 — "  Development  of  Trans- 
portation in  the  U.  S.";  1900 — "Influence  of  Transportation  on  Fruit  Indus- 
try," 561-580;  1905— "Handling  of  Fruit  for  Transportation,"  349-363; 
1906— "Freight  Costs  and  Market  Values,"  371-387;  1908— "Cost  and 
Methods  of  Transporting  Meat  Animals,"  227-245;  1917—  "Federal  Aid  to 
Highways,"  127-139. 

15.  "Rural  Motor  Express."  (See  Automobile  Chamber  of  Commerce  of 
the  United  States,  New  York  City.) 


CHAPTER  XIII 

INSURANCE 

In  the  insurance  of  his  dweUing  and  other  farm  buildings,  the 
farmer  is  in  the  same  position  as  any  other  owner  of  buildings. 
This  risk  is  very  commonly  carried  by  a  farmer's  cooperative 
insurance  company,  or  a  joint  stock  company,  a  large  number  of 
which  do  business  in  each  State  and  are  subject  to  the  laws  and 
supervision  of  that  State. 

But  the  growing  of  crops  and  of  live  stock  place  on  the  farmer 
a  risk  peculiar  to  the  agricultural  industry.  Insurance  in 
these  fields  has  developed  in  three  general  forms,  namely,  the 
joint-stock  company  (the  ordinary  corporation),  the  mutual 
company  (a  cooperative  enterprise),  and,  in  recent  years, 
State  insurance. 

The  joint  stock  companies  have  long  occupied  most  of  the  field. 
Yet  discontent  with  this  form  of  insurance  is  steadily  growing 
among  the  farmers.  The  chief  criticism  seems  to  be,  not  that 
these  companies  have  failed  to  pay  their  losses,  not  that  they  have 
been  unduly  harsh  in  their  methods  of  adjustment,  but  that  they 
have  collected  too  large  a  toll  from  the  farmer.  These  com- 
panies reply  that  their  charges  have  been  fair  considering  the 
service  rendered  and  the  coverage  afforded,  and  that  they  have 
collected  no  more  'HoU"  in  good  years  than  was  needed,  on 
business  grounds,  to  build  up  a  safe  and  adequate  reserve  against 
the  bad  years. 

Farmers'  mutuals,  coming  into  the  field,  commonly  use  the 
assessment  method  of  paying  their  losses.  Where  they  have 
tried  a  level  premium  plan,  they  have  committed  the  error  of 
making  it  too  low,  and  hence  of  having  heavy  unpaid  losses  in 
bad  years.  Where  the  assessment  plan  has  come  into  use,  as  it 
has  very  widely,  it  often  operates  under  two  handicaps :  the  area 
covered  is  too  small,  placing  in  consequence  too  much  risk  on 
each  member;  the  volume  of  business  is  small,  making  an  over- 
head expense  too  high.  A  mutual  company  operating  over  an 
entire  State,  with  risks  well  distributed,  and  having  a  large  volume 
of  business,  is  able  to  carry  insurance  to  the  farmer  at  actual 
cost,  including,  of  course,  a  small  overhead  expense.  But  there 
are  no  dividends  to  be  declared. 

205 


206  INSURANCE 

In  recent  years  the  demand  for  certain  forms  of  State  insurance, 
particularly  State  hail  insurance,  has  become  very  insistent.  A 
good  example  of  this  is  the  Saskatchewan  hail  insurance  conducted 
by  the  rural  municipalities  of  that  province. 

Saskatchewan's  Experience. — In  the  United  States  speakers 
and  writers  in  recent  years  paint  glowing  pictures  of  Saskatche- 
wan's success  with  state  hail  insurance.  The  experience  of  this 
province  is  therefore  worthy  of  some  attention.  Saskatchewan, 
justly  famous  for  its  farmers'  cooperative  grain  elevators  and  for 
other  successful  cooperative  enterprises,  is  a  prairie  province, 
only  a  small  fraction  of  whose  area  is  as  yet  under  tillage.  Out 
of  an  area  of  155,764,000  acres,  only  2,900,000  acres  are  "in  farms." 
The  area  in  grain  is  of  course  but  a  small  fraction  of  the  farm  area. 
Here  a  law  was  enacted  in  1912  providing  a  system  of  insurance  of 
the  standing  crops  of  wheat,  oats,  barley,  flax,  rye,  and  speltz 
against  loss  by  hail.  The  law  was  revised  in  1915,  and  again 
revised  in  1917.  Let  us  first  examine  it  before  the  1917  changes 
were  introduced.  The  maximum  amoimt  of  compensation  allowed, 
in  case  of  total  loss,  was  $5  an  acre,  and  the  minimum,  25  cents 
an  acre.  A  tax  of  four  cents  an  acre  on  all  lands  (except  such  as 
might  l5e  withdrawn)  was  levied  to  cover  the  losses.  That  is,  a 
farmer  paid  $6.40  to  secure  $800  protection  on  a  quarter  section, 
i.e.,  160  acres.  The  levy  of  the  four  cents  an  acre  applied  to  all 
lands  except  those  formally  withdrawn  by  Avritten  notice  prior 
to  June  1.  One  or  more  quarter  sections  could  be  so  withdrawn 
provided  (a)  they  were  fenced  in  and  used  by  the  owner  for  grazing 
and  hay  purposes;  (6)  unpatented  quarter  sections  on  which  the 
settler  has  less  than  25  acres  under  cultivation;  (c)  any  fenced 
quarter  section  having  less  than  25  acres  under  cultivation.  Each 
rural  municipality  enjoyed  complete  home  rule  as  regards  the 
adoption  or  rejection  of  the  scheme.  A  majority  vote  for  the 
scheme,  at  a  referendum  for  that  purpose,  made  it  operative  in 
the  municipality  till  a  fiu-ther  referendum  should  be  had.  The 
moneys  collected  were  paid  into  a  common  pool  and  administered 
by  a  commission  of  three  persons,  two  of  whom  represented  the 
municipalities,  and  one  the  government.  Some  statistics  will 
show  the  workings  of  the  law  during  its  first  few  years. 

At  the  first  elections  after  the  Act,  115  rural  municipalities 
voted  to  come  under  it,  representing  20,000,000  acres  of  land. 
The  first  year's  business  showed  losses  and  administration  expenses 
of  $777,697.59,  and  a  net  revenue  of  $788,389.50,  thus  leaving  a 
surplus  for  reserve  of  $10,691.91. 


NORTH  DAKOTA  STATE  HAIL  INSURANCE  207 

The  second  year  three  municipahties  withdrew  and  fourteen 
new  ones  came  in,  making  126  municipahties  under  the  Act. 
This  year  the  losses  and  expenses  amounted  to  $543,665.62,  and 
the  net  revenues  to  1896,365.26.  After  setting  aside  a  tax  adjust- 
ment reserve  fund,  the  surplus  to  reserve  became  $348,391.55. 

The  year  1915  found  127  municipahties  under  the  Act,  with 
22,000,000  acres  of  land,  of  which  5,000,000  was  in  crops. 

The  year  1916  proved  to  be  the  inevitable  ''bad  year"  that 
comes  to  all  hail  insiu-ance  companies.  The  strain  was  too  severe 
for  the  system  to  stand.  The  hail  losses  were  ten  per  cent  of  the 
crop,  amounting  to  a  loss  of  $3,600,000.  The  revenue  was  only 
$1,500,000,  or  a  httle  over  two  million  dollars  short  of  paying 
the  losses. 

The  Saskatchewan  legislature,  accordingly,  in  1917  made  a 
thorough  revision  of  the  Municipal  Hail  Insurance  Act.  As 
revised,  the  Act  provides  for  a  system  of  management  similar 
to  that  of  the  Cooperative  Elevator  Company  of  that  province. 
Each  municipality  votes  on  the  question  of  coming  under  the 
scheme.  Each  municipality  so  voting  appoints  a  delegate  to 
represent  it  at  the  annual  general  meeting  of  the  organization. 
At  this  general  meeting  the  directors  are  chosen,  the  scheme 
providing  for  nine  in  all,  three  to  retire  each  year.  This  puts  the 
management  completely  into  the  hands  of  the  municipalities. 
The  general  meeting,  in  reality  a  legislative  body  on  this  one 
economic  matter,  has  power  to  make  provision  for  a  crop  acre- 
age assessment  in  addition  to  a  flat  rate  if  it  so  desires,  but 
such  action  on  the  part  of  the  general  meeting  cannot  become 
operative  in  the  current  year,  thus  giving  opportunity  to  any 
dissatisfied  municipality  to  withdraw  from  the  scheme  at  the 
intervening  election. 

Thus  the  principle  of  state  hail  insurance  has  not  been 
abandoned,  or  even  discredited  in  the  eyes  of  the  Saskatchewan 
farmers.  Apparently  they  have  committed  themselves  for  good 
to  this  principle. 

North  Dakota  State  Hail  Insurance. — The  State  of  North 
Dakota  may  serve  as  a  type  of  state  experimentation  with  hail 
insurance.  In  1911  a  law  was  passed  providing  for  a  State  admin- 
istered system  of  hail  insurance,  under  the  jurisdiction  of  the  State 
Commissioner  of  Agriculture  and  Labor.  The  insurance  fund  was 
derived  from  a  charge  of  20  cents  an  acre  on  the  insured  crops. 
Farmers  were  offered  the  opportunity  in  April  or  May,  when  the 
local  tax  assessor  came  around  to  value  their  property,  to  buy  hail 


208 


INSURANCE 


insurance.  The  assessor  was  allowed  25  cents  per  quarter  section 
and  10  cents  for  each  additional  quarter  to  one  owner  for  all  such 
insurance  written  by  him.  But  this  compensation  proved  too 
small,  and  hence  he  made  little  effort  to  sell  insurance.  In  1913 
the  law  was  revised.  The  assessor  was  allowed  a  fee  of  one-half 
cent  per  acre — a  very  substantial  increase.  The  charge  for  insur- 
ance was  raised  to  30  cents  an  acre.  The  maximum  protection 
allowed  was  $8.00  an  acre.  The  assessor  was  required  to  collect 
his  fee  and  the  entire  cost  of  the  insurance  in  cash  from  the  farmer 
at  the  time  the  application  for  insurance  was  written.  This  proved 
a  very  serious  handicap,  since  the  farmer's  habit  is  to  pay  his  bills 
in  the  fall,  after  the  grain  harvest.  Consequently  the  number  of 
farmers  taking  out  State  hail  insurance  was  small.  In  actual 
operation  this  law  worked  as  follows: 


North  Dakota  State  Hail 

Insurance — 1911-1916.     Maximum  Protection,  $8 
an  Acre 

1911 

1912 

1913 

1914 

1915 

1916 

Number  of  policies 
issued 

1011 

139 

$26,104.64 

$21,510.03 
70 
$3,345.08 

12.9 

2505 
443 

$64,840.37 

$57,936.69 
55 
$4,882.02 

7.5 

773 

91 

$27,214.37 

$24,890.78 
88 
$3,074.11 

11.3 

761 

114 

$27,771.72 

$24,985.39 
65 
$2,876.70 

10.4 

580 

95 

$20,853.22 

$18,701.34 
75 
$2,181.53 

10.5 

845 

Number  of  losses. . 

Premium  receipts. 

Losses  paid: 

Dollars 

Per  cent 

Cost  of  operation. . 

Per  cent  of  operat- 
ing expenses. . 

257 
$33,113.10 

$30,161.26 
38 
$3,098.44 

9.4 

The  operation  of  this  law  proved  both  inconvenient  and  costly 
to  the  farmers.  Hence  the  demand  arose  that  state  hail  insurance 
be  made  compulsory  and  a  tax  be  levied  on  all  agricultural  land 
to  defray  the  cost.  This  demand  involved  an  amendment  to  the 
State  Constitution.  Such  an  amendment,  following  the  devious 
course  provided  by  law,  passed  the  1915  legislature,  the  1917 
legislature,  and  went  before  the  people,  for  their  ratification,  in 
the  regular  election  of  1918  and  was  then  ratified. 

Mutual  Hail  Insurance. — Cooperative  hail  insurance,  or  mutual 
hail  insurance  as  it  is  generally  termed,  is  successfully  conducted 
in  many  parts  of  the  country.  The  peculiar  problems  of  this  form 
of  insurance  may  best  be  seen  by  taking  a  concrete  example. 
For  our  study  let  us  take  the  Alliance  Hail  Association  of  North 
Dakota,  which  completed  the  twenty-eighth  year  of  service  in 
1918.  It  is  an  example  of  a  successful  insurance  company  all  of 
whose  officers  and  directors  are  practical  farmers.  It  is  incorpor- 
ated under  North  Dakota  laws  and  is  subject  to  the  strict  super- 


MUTUAL  HAIL  INSURANCE  209 

vision  of  the  State  Insurance  Department.  It  claims  as  its  five 
cardinal  principles  the  following:  fair  treatment;  best  protection 
at  lowest  cost;  fair  adjustment  of  losses;  prompt  payment;  a 
thorough  annual  audit.  The  nominal  rate  of  premium  is  6  per 
cent  of  the  risk.  But  the  amount  of  the  risk  is  strictly  limited, 
$100  being  the  minimum;  the  maximum  on  any  one  quarter  section 
is  $800,  $1600  on  any  one  section,  and  $20,000  on  any  one  town- 
ship. Insurance  in  no  case  shall  exceed  $8.00  an  acre.  There  is  a 
so-called  ^'contingent  Hability"  of  6  per  cent  in  addition  to  the 
nominal  6  per  cent  premium.  The  amount  of  premium  collected, 
usually  four  or  five  per  cent,  depends  of  course  on  the  losses  for 
the  year.  If  12  per  cent  should  prove  inadequate  {i.e.,  ninety-six 
cents  an  acre),  the  losses  are  to  be  paid  pro  rata  and  this  to  con- 
stitute a  full  settlement  of  the  insurance.  No  unpaid  losses  are 
to  constitute  a  liability  in  the  next  year's  accounting.  Applicants 
for  insurance  in  nearly  all  cases  give  their  note  due  October  1. 
Insurance  is  wTitten  solely  on  the  mutual  plan,  and  only  one 
assessment  can  be  made  in  any  one  year,  and  that  only  for  the 
current  year's  business. 

Only  four  times  in  the  history  of  this  company  were  there 
unpaid  losses,  these  amounting  to  $64,428.91,  or  less  than  one- 
fourth  of  one  per  cent  of  the  risks  carried.  There  is  no  ''table  of 
mortality"  in  the  hail  insurance  business,  and  each  company 
must  be  its  own  actuary.  The  cost  per  $1000  of  insurance  varies 
widely  from  year  to  year.  Had  this  company  met  all  its  losses 
during  the  first  19  years  of  its  existence,  the  actual  cost  would 
have  been  $46.82  per  $1000.  Hence  a  six  per  cent  assessment, 
if  collected,  would  be  more  than  ample.  This  company  passed 
through  two  crises  in  its  history,  but  managed  to  survive  both. 
Only  twice  did  the  administrative  expenses  exceed  the  losses  paid. 
These  occasions  were  when  the  business  was  at  a  low  ebb  and  the 
losses  unusually  light.  The  chief  item  of  expense  is  the  commission 
paid  to  agents.  And  here  is  the  paradox  of  the  middleman  again! 
By  experience  this  farmer's  company  has  found  out  that  the  more 
it  pays  to  agents  (to  the  ''middlemen"),  the  less  it  costs  the  farmer 
for  operating  expenses.  For  exactly  as  more  agents  are  employed 
and  the  volume  of  business  becomes  greater,  the  less  becomes  the 
portion  of  the  total  outlay  going  into  operating  expenses,  and  the 
greater  becomes  the  portion  of  outlay  going  into  the  payment  of 
losses.  In  short,  the  more  the  farmers  pay  these  middlemen  the 
less  the  farmer's  insurance  costs  him.  Yet,  according  to  the 
theory  of  "direct  marketing"  there  should  be  no  costs  at  all  for 
14 


210  INSURANCE 

agents  to  sell  insurance  to  the  farmer,  but  a  saving  of  these  costs 
of  many  tens  of  thousands  of  dollars  a  year.  The  farmers,  in 
theory,  will  come  up  without  solicitation  and  apply  to  their  own 
mutual  company  for  insurance — a  two-cent  letter  as  a  reminder 
being  sufficient  for  the  purpose.  This  theory  was  indeed  even 
tested  by  this  Association.  By  taking  their  agents  off  the  road, 
the  volume  of  business  was  contracted  to  near  the  zero  point. 
Few  farmers  took  out  insurance.  But  almost  the  same  overhead 
office  expenses  had  to  be  borne  by  the  few  farmers  as  by  the  many 
in  the  years  of  big  business,  and  hence  the  cost  of  the  insurance 
was  increased,  not  reduced,  by  this  pseudo-economy. 

One  "economy"  practised  by  this  company  is  the  payment  of 
low  salaries,  farmers  disbelieving  in  the  theory  of  high  priced 
officials.  In  1896  salaries  were  cut  from  $2400  (for  two  officers) 
to  $2200.  In  1903  the  president  was  put  on  a  no-salary  basis. 
Later,  however,  he  was  given  a  compensation  of  $1200  a  year, 
which  covered  his  services  as  adjustor  also.  Stock  companies, 
at  the  same  time,  were  paying  from  two  to  ten  times  as  much  for 
the  same  class  of  men. 

Collection  of  premiimis  is  slow.  Farmers  give  their  notes 
without  interest  for  the  full  six  per  cent  premium,  thus  making 
the  insurance  just  as  cheap  on  time  as  for  cash.  From  70  to  95 
per  cent  of  the  premiums  is  the  most  that  can  be  collected,  and 
much  of  this  runs  two  and  three  years.  This  is  perhaps  one  of  the 
weak  features  of  a  mutual  company.  Harsh  measures  of  collection 
would  alienate  the  good-will  of  rural  communities. 

This  company  has  a  thorough  and  complete  audit  once  a  year. 
For  the  delicate  work  of  adjusting  losses  only  the  most  competent 
men  are  used.  For  several  years  this  work  was  done  by  the  presi- 
dent himself,  a  large  farmer  and  a  man  peculiarly  well  fitted  for 
the  task. 

Wide  distribution  of  losses  is  secured  by  carrying  insurance 
in  every  county  in  the  State.  Agents  are  sent  out  who  can  speak 
the  various  languages  of  the  North  Dakota  farmers.  The  chief 
nationalities  now  reached  are  the  Germans,  French,  Russians, 
Norwegians,  Bohemians,  Poles;  also  the  Jewish  farmers. 

One  lesson  has  been  taught  by  this  Association,  and  that  is  the 
folly  of  making  the  assessment  too  low.  The  heavy  loss  is  sure 
to  come,  and  it  should  be  provided  for.  Under  the  present  by-laws 
(for  there  is  no  established  policy  yet  in  the  matter)  there  is  no 
provision  for  a  surplus  or  reserve  fund,  each  year's  receipts  being 
applied  to  the  same  year's  expenditures  only.    The  experience  of 


PRESENT  TENDENCY  211 

the  years  1904-1908  would  seem  to  show  the  wisdom  of  a  different 
course.  In  1904  an  '' expense  fund"  was  provided  for.  This 
reserve — for  such  it  was — grew  to  $46,106.46  in  1906,  after  all 
losses  of  that  year  had  been  paid.  The  1906  losses  were  $38,121.24, 
while  the  losses  the  next  year  were  $312,085.72,  or  over  eight 
times  as  much.  Consequently  the  reserve  was  wiped  out,  an  8 
per  cent  assessment  used  up,  and  still  an  unpaid  balance  of  losses 
of  over  $30,000  was  left  over  to  the  next  year.  The  by-laws  at 
present  do  not  permit  a  carryover  of  unpaid  losses.  A  larger 
assessment  in  good  years  and  a  lower  assessment  in  bad  years 
would  equalize  the  burden  and  promote  the  welfare  of  the  Asso- 
ciation. If  the  total  volume  of  business  could  be  greatly  increased, 
thus  reducing  the  share  of  operating  expenses — and  if  a  level 
premium  or  at  least  some  nearer  approach  to  a  level  premium  of, 
say,  five  per  cent  could  be  charged — it  is  likely  that  a  big  reserve 
could  be  built  up  against  the  bad  years.  Future  crises  could  then 
be  met.  As  it  is,  a  mutual  company  is  always  walking  on  the 
brink  of  dissolution. 

Present  Tendency. — ^The  state  of  mind  of  the  farmer  to-day  is 
turning  him,  instinctively,  to  State  administered,  compulsory  hail 
insurance.  He  knows  that  his  own  mutual  company  is  paying 
to  its  ''middlemen"  from  10  to  70  per  cent  of  the  total  outlay  for 
hail  insurance,  but  that  without  these  middlemen  he  would  either 
have  no  insurance  at  all  or  much  costlier  insurance.  Hence  he  is 
wondering  why  the  State  cannot  undertake  this  service.  The 
farmer's  position  has  peculiar  strength  and  force  here,  since  the 
State  now  has  in  working  order  complete  machinery  for  levying 
and  collecting  taxes  and  assessments  of  various  kinds.  With  a 
negligible  increase  in  expense,  it  could  collect  a  compulsory  hail 
insurance  tax. 

In  actual  practice,  as  this  chapter  shows,  neither  State  hail 
insurance  nor  mutual  hail  insiu*ance  is  at  this  stage  of  affairs  a 
complete  success.  But  experience  with  State  hail  insurance  makes 
the  farmer  want  more  of  it,  not  less  of  it. 

Those  desiring  to  trace  in  detail  the  vicissitudes  of  a  mutual 
hail  insurance  company  through  a  period  of  a  quarter  of  a 
century  can  do  so  by  studying  the  following  table.  The  great 
fluctuation  in  losses  from  year  to  year  is  a  striking  feature  of 
the  table. 


212 


INSURANCE 


A  Farmers^  Mutual  Hail  Insurance  Company. — The  Alliance  Hail  Association 

of  North  Dakota 


Year 

Number 

of 
policies 

Amount  of 
insurance 

Paid  to 
agents 

Salaries 

and  clerk 

hire 

Total 
adminis- 
trative 
expense 

Losses  paid 
and  unpaid 

Acres  170,295 

$  31,578.49  paid 

1891 

.1812 

$1,362,360 
Acres    96,115 

$  3,503.22 

$2,149.06 

$  8,419.27 

7,383.22  unpaid 
11,259.42  paid 

1892 

987 

$    768,922 
Acres  110,853 

2,105.99 

2,674.66 

7,142.92 

0 
9,778.43  paid 

1893 

999 

$    886,821 
Acres  118,411 

2,265.23 

2,926.06 

7,626.36 

0 
9,123.46  paid 

1894 

1140 

$    947,288 
Acres  224,731 

2,505.36 

3,230.66 

8,468.97 

0 
79,302.60  paid 

1895 

2141 

$1,797,848 
Acres    96,880 

4,795.31 

3,107.66 

12,169.34 

0 
20,688.03  paid 

1896 

992 

$    775,040 
Acres    56,253 

i, 866.32 

2,449.56 

7,173.42 

13,465.29  unpaid 
6,955.10  paid 

1897 

725 

$    450,024 
Acres    99,302 

i, 323.65 

2,215.75 

5,624.29 

0 
29,907.83  paid 

1898 

1126 

$    792,416 
Acres  144,830 

2,675.36 

2,265.56 

.  7,587.26 

0 
51,465.68  paid 

1899 

1686 

$1,198,640 
Acres    13,738 

4,586.79 

2,387.75 

16,914.69 

36,112.69  unpaid 
26,631.90  paid 

1900 

234 

$    109,904 
Acres    43,659 

434.43 

2,266.66 

3,615.56 

0 
10,338.50  paid 

1901 

624 

$    349,272 
Acres    62,523 

i, 34  7.  is 

i,700.06 

4,591.3i 

0 
21,356.32  paid 

1902 

145 

$    500,184 
Acres    46,299 

3,013.48 

2,141.50 

7,234.90 

7,467.71  unpaid 
5,747.08  paid 

1903 

600 

$    370,392 
Acres  178,317 

2,129.32 

i,  768. 66 

6,594.  is 

0 
17,675.59  paid 

1904 

1484 

$    933,755 
Acres  263,488 

8,087.79 

2,641.96 

14,611.74 

0 
34,257.57  paid 

1905 

2710 

$1,828,631 
Acres  382,911 

16,587.73 

2,389.25 

23,959.55 

0 
38,121.24  paid 

1906 

4231 

$3,063,289 
Acres  496,669 

27,415.65 

3,031.55 

36,778.09 

0 
312,085.72  paid 

1907 

5217 

$3,973,349 
Acres  394,299 

35,834.69 

3,982.60 

49,637.40 

0 
101,519.68  paid 

1908 

4473 

$3,154,394 
Acres  659,651 

28,231.43 

4,270.75 

41,389.02 

0 
244,546.32  paid 

1909 

8005 

$5,277,208 
Acres  539,951 

47,281.92 

5,541,36 

63,166.12 

0 
141,779.57  paid 

1910 

4192 

$2,932,924 
Acres  917,595 

22,415.78 

5,672.75 

37,417.82 

0 
250,118.62  paid 

1911 

6138 

$4,793,979 
Acres  473,756 

32,599.72 

6,636.66 

51,619.38 

0 
127,112.72  paid 

1912 

3975 

$2,626,115 
Acres  279,795 

26,661.61 

6,361.65 

35,977.66 

0 
40,138.66  paid 

1913 

2288 

$1,565,532 
Acres  470,835 

19,809.23 

6,383.25 

33,836.69 

0 
89,843.85  paid 

1914 

3747 

$2,615,513 
Acres 

23,054.49 

7,604.83 

46,083.55 

0 
157,807.05  paid 

1915 

4107 

$3,327,061.62 
Acres 

27,732.73 

7,572.98 

45,653.69 

0 
211,719.30  paid 

1916 

3390 

$2,890,794.10 

31,242.75 

8,304.89 

49,818.26 

0 

QUESTIONS  ON  THE  TEXT 

1.  Distinguish  between  agricultural  insurance  and  general  property  insurance. 

2.  What  grievance,  if  any,  has  the  farmer  against  the  joint  stock  insurance 

companies?    How  is  the  farmer  answered  by  the  joint  stock  company? 

3.  What  mistakes  have  farmers'  mutuals  commonly  made? 

4.  Explain  in  detail  the  Saskatchewan  experience  with  state  hail  insurance. 

5.  Show  why  such  a  low  assessment  is  used  in  Saskatchewan. 

6.  Has  the  principle  of  state  hail  insurance  been  discredited  in  Saskatchewan? 

7.  Discuss  in  detail  North  Dakota's  experience  with  state  hail  insurance. 


REFERENCES  213 

8.  Point  out  the  chief  flaws  in  the  early  Dakota  scheme.    Why  was  the  State 

never  able  to  pay  the  losses  in  full? 

9,  Explain  at  length  the  workings  of  the  Alhance  Hail  Association.    What 

principles  are  illustrated  by  the  experience  of  this  company?     What 
about  the  use  of  "middlemen"  in  selling  insurance? 
10.  What  is  the  present  tendency  in  hail  insurance  administration? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Should  state  hail  insurance  of  growing  crops  be  assessed  on  all  farm  lands, 

including  pasture  lands? 

2.  Is  insurance  a  proper  function  of  the  State?    If  so,  should  it  be  voluntary 

or  compulsory? 

3.  Should  mutual  companies  operate  on  the  level  premium  plan  or  on  the 

assessment  plan? 

REFERENCES 

1.  For  North  Dakota  experience  with  State  Hail  Insurance,  consult 
biennial  reports  of  Commissioner  of  Agriculture  and  Labor,  Bismarck,  1911 
and  following  years. 

2.  Valgren,  V.  N.:  "The  Organization  and  Management  of  a  Farmers' 
Mutual  Fire  Insurance  Company."  Bulletin  530,  United  States  Department 
of  Agriculture,  Washington,  May,  1917. 

3.  — ■ — — ■:  "Prevailing  Plans  and  Practices  Among  Farmers'  Mutual 
Fire  Insurance  Companies."  Bulletin  786,  U.  S.  Department  of  Agriculture, 
1919. 

4.  Other  publications  of  the  U.  S.  Department  of  Agriculture:  "Cotton 
Warehouse  Construction"  (Dept.  Bulletin  277);  "Modern  Methods  of  Pro- 
tection Against  Lightning"  (Farmers'  Bulletin  842);  "Fire  Prevention  and 
Fire  Fighting  on  the  Farm"  (Farmers'  Bulletin  904);  "Farmers'  Mutual  Fire 
Insurance"  (Separate  697,  Yearbook  1916). 


CHAPTER  XIV 

COLD  STORAGE 

The  series  of  inventions  during  the  last  one  hundred  and  fifty 
years  giving  us  our  modern  system  of  mechanical  refrigeration 
and  cold  storage  marks  one  of  the  great  triumphs  of  civilization. 
The  preservation  of  food  by  canning  was  an  important  step. 
But  the  present  use  of  refrigeration  in  the  saving  of  food  is  a 
vastly  more  important  advance.  Perishable  foodstuffs,  fresh  and 
in  good  condition,  may  now  be  found  on  the  tables  of  the  poorest 
of  our  people,  foodstuffs  hundreds  or  even  thousands  of  miles 
from  the  place  of  their  production,  and  many  weeks  or  months 
after  the  time  of  their  production.  The  seasonal  nature  of  certain 
farm  products  makes  it  advisable  to  store  them  in  the  time  of 
plenty  that  they  may  be  consumed  in  the  time  of  relative  scarcity. 
Thus  half  the  fresh  butter  produced  in  the  country  goes  to  the 
market  during  the  four  summer  months.  May,  June,  July,  August. 
The  heavy  producing  season  for  eggs  is  the  three-month  period, 
April,  May,  June,  equalling  the  remaining  nine  months. 

The  seasonal  production  of  foods  and  the  consequent  seasonal 
ebb  and  flow  of  these  goods  in  and  out  of  cold  storage  is  illustrated 
by  the  case  of  butter  and  eggs.  The  graphs  (Figs.  40  and  41)  show 
receipts  and  dehveries  of  butter  and  eggs  in  the  Quincy  (Massachu- 
setts) Cold  Storage  and  Warehouse  Company's  plant  for  two  years. 

The  graphs  clearly  illustrate  the  chief  function  of  cold  storage, 
namely,  to  equalize  the  distribution  of  seasonal  products  through- 
out the  year.  In  other  words,  cold  storage  acts  like  a  reservoir, 
receiving  the  surplus  flow  of  goods  when  production  exceeds 
demand  and  a  market  glut  is  impending,  and  giving  out  these 
same  goods  when  production  has  fallen  off  and  a  market  scarcity 
is  impending.  The  public  is  thus  benefited  by  having  a  greater 
variety  of  food  during  all  seasons  of  the  year.  A  second  function 
of  cold  storage,  equally  important,  is  the  transportation,  under 
refrigeration,  of  perishable  foods  in  good  condition  to  the  consumer. 
Thus  Imperial  Valley  cantaloupes  reach  the  New  England  con- 
sumer's table  without  harmful  exposure  to  heat  and  without 
deterioration  of  quality.  In  the  same  manner  lemons  from  Italy, 
oranges  from  California,  pineapples  from  Hawaii,  all  reach  the 
distant  consumer  in  a  fresh  condition.  Similarly,  mutton  from 
Australia  and  beef  from  Argentine  are  served  in  a  wholesome  con- 
214 


THE  SEASONAL  PRODUCTION  OF  FOODS 


215 


dition  on  the  table  in  England.    Obviously  the  producer  benefits 
by  thus  finding  markets,  and  at  the  same  time  the  consumer  bene- 


Apr     Jun.     Aug. 
I9IO 


Jan.      Aug.    Oct 
1909 
Fig.  40. — Cold  storage.     Cases  of  eggs  received  and  delivered. 


J 9// 


fits  by  having  a  large  volume  of  food  reach  the  market  without 
waste  or  decomposition.    The  importance  of  this  factor  in  time  of 


216 


COLD  STORAGE 


great  emergencies  and  national  crises  is  well  illustrated  by  our 
experience  in  exporting  fresh  meat  to  our  soldiers  and  to  most 
of  our  allies  during  the  World  War.  Hundreds  of  carloads  of 
fresh  meats  were  rushed  from  the  packers  to  the  seaboard.  Owing 
to  freight  congestion  and  shortage  of  ships,  much  of  this  meat  had 


Amg. 
1909 


/^// 


Jd/0 

Fig.  41. — Cold  storage.    Pounds  of  butter  received  and  delivered. 

to  be  held  weeks  and  even  months  before  going  overseas.  Conse- 
quently it  was  placed  in  cold  storage  warehouses,  much  of  it  going 
into  the  empty  apple  warehouses  in  the  neighborhood  of  Buffalo 
and  Rochester,  New  York.  Here  it  was  kept  at  several  degrees 
below  the  freezing  point  till  shipping  space  was  available,  and  then 
it  was  forwarded  to  its  destination  without  waste  and  without  dete- 


EXTENT  AND  USE  OF  COLD  STORAGE  217 

rioration.     Thus  in  the  wartime  mobilization  of  our  industrial 
resources  an  important  place  must  be  accorded  to  cold  storage. 

Extent  and  Use  of  Cold  Storage. — It  is  very  likely  that  the 
United  States  leads  the  world  in  the  number  of  cold  storage  ware- 
houses (Figs.  42  and  43).  There  are  approximately  1500  of  such 
warehouses  in  this  country.  There  are  three  classes  of  cold  storage 
warehouses,  namely:  (1)  public  cold  storage  warehouses  in  which 
food  products  are  stored  for  hire,  and  the  owner  of  the  house  is 
not  interested  in  the  foods  stored;  (2)  private  cold  storage  ware- 
houses, in  which  the  owner  of  the  house  stores  food  products  of 
which  he  is  the  owner;  (3)  combined  public  and  private  ware- 


-ss^a 


Fig.  42. — Cold  storage  warehouse  in  Chicago. 

houses,  in  which  the  owner  stores  both  his  own  commodities  and 
also  the  commodities  of  others. 

The  chief  products  now  subject  to  cold  storage  are  the  follow- 
ing: apples,  butter,  cheese,  eggs,  frozen  and  cured  meats  and  lards, 
and  fish  (Figs.  44  and  45).  The  significance  of  cold  storage  is  sug- 
gested by  the  amount  of  meats  in  storage  on  June  1, 1919,  namely, 
1,348,000,000  pounds — a  20  days'  supply  for  the  whole  country. 
These  meats  were  on  their  normal  course  from  producer,  through 
the  packing  houses,  to  the  consumers,  in  the  following  manner: 

65  per  cent:    hams,  bacon,  etc.     In  process  of  curing  (a 

process  requiring  from  30  to  90  days). 
10  per  cent:  frozen  pork.    To  be  cured  later  in  the  year. 
6  per  cent:   lard. 
19  per  cent:  frozen  beef  and  lamb.    In  part  owned  by  the 

Government  and  intended  for  overseas  shipment. 

100 


218 


COLD  STORAGE 


It  will  be  noted  that  the  large  volume  of  ''meats  in  storage" 
represents  in  part  unfinished  goods  in  process  of  curing  and  in 
part  the  normal  working  supply  to  assure  a  steady  volume. 

The  cold  storage  business  is  grooving  rapidly,  not  only  in  the 
United  States,  but  in  many  other  countries.    Indeed,  so  important 


Fig.  43. — Packing-house  products  stored  in  a  public  cold  storage  warehouse  in  Chicago. 


is  the  business  to  public  welfare  that  various  countries  are  now 
promoting  the  building  of  cold  storage  warehouses.  Thus  a  con- 
sular agent  of  our  government  reported  recently  that  the  Swedish 
State  was  building  a  refrigerating  plant  at  Hallsberg,  Sweden, 
for  the  freezing  of  meat,  fish,  and  other  foods,  having  a  capacity 
of  four  thousand  tons.  The  backward  state  of  cold  storage  in 
Russia  during  the  World  War  was  described  by  our  consular  gen- 
eral at  Moscow  in  these  words : 


INFLUENCE  OF  COLD  STORAGE  ON  HEALTH     219 

"Prior  to  the  War,  only  the  following  towns  were  provided  with  slaughter- 
house refrigeration  plants :  Tiflis,  Astrakhan,  Rostof-on-Don,  Taganrog,  Riga, 
Tashkent,  Minsk,  Moscow,  and  Petrograd.  Most  of  the  big  cities  are  still 
unprovided  with  these  facilities.  The  various  municipal  councils  have  become 
conscious  of  this  unsatisfactory  state  of  affairs,  and  projects  for  building 
improved  slaughterhouses,  provided  with  refrigerating  plants,  are  now  pre- 
senting themselves  everywhere. 

"The  great  cities  and  meat-consuming  centers  were  suppHed  by  trans- 
porting hve  cattle  from  the  breeding  districts  in  Siberia,  the  Northern  Cau- 
casus, and  the  Steppe  district.  Only  during  frosty  weather  were  the  cattle 
killed  and  frozen  by  natural  means  at  the  place  of  production.  The  frozen 
meat  was  then  carried  in  trucks  to  the  capitals  and  industrial  districts  in 
Russia.  This  primitive  way  of  preserving  and  transporting  the  meat  is  rather 
dangerous,  especially  if  a  thaw  sets  in  on  the  way.  It  often  happens  that 
milUons  of  rubles'  worth  of  meat  is  damaged  owing  to  defective  cold  storage 
en  route  and  at  the  place  of  consumption. 

"The  war,  as  has  been  said,  gave  rise  to  endeavors  to  find  a  satisfactory 
solution  of  the  refrigeration  question.  The  Government  has  decided  to  build 
25  slaughterhouses  with  refrigerating  plants  in  different  districts  of  Russia, 
and  the  building  of  15  more  is  under  consideration.  During  the  war,  the  Gov- 
ernment is  to  organize  and  run  these  estabUshments.  After  the  war  the  move- 
ment now  started  will  necessitate  the  organization  of  several  meat-trading 
companies.  The  big  Petrograd  Goods  Storing,  Refrigerating  Rooms,  and 
Elevator  Company  has  already  started  to  build  large  slaughterhouses  with 
refrigerating  plants,  in  the  town  Biyisk  of  Siberia.  This  fact  shows  that  people 
have  begun  to  realize  that  there  is  plenty  of  room  for  private  enterprise  in 
the  systematic  meat  trade."  ^ 

The  Canadian  government  several  years  ago  enacted  a  law  pro- 
viding for  subsidizing  the  building  of  public  cold  storage  warehouses, 
in  the  interest  of  both  producers  and  consumers.  The  administra- 
tion of  the  act  was  placed  under  the  Minister  of  Agriculture. 

From  the  public  welfare  standpoint,  the  two  paramount 
questions  concerning  cold  storage  are  its  effects  on  health  and  on 
prices.  A  great  deal  of  the  press  comment  on  cold  storage  propa- 
gates the  charge  that  goods  preserved  by  the  cold  storage  method 
are  not  only  inferior,  but  are  dangerous  to  public  health.  Equally 
common  is  the  press  comment  that  cold  storage  enables  food 
speculators  to  withdraw  food  from  the  market,  hoard  it,  and  force 
prices  up  to  artificially  high  levels.  The  laws  of  supply  and 
demand,  it  is  charged,  are  thus  set  aside.  Both  these  charges  are 
serious  and  demand  attention. 

Influence  of  Cold  Storage  on  Health. — ^A  few  abuses  have  at 
times  arisen  in  the  use  of  cold  storage,  as  in  the  use  of  everything 
else.  But  impartial  investigations  of  the  subject  by  eminent 
chemists  and  hygienic  experts  have  repeatedly  brought  in  the 
verdict  that  cold  storage  is  an  important  and  beneficial  method 

1  Summarized  from  a  report  made  in  December,  1916,  by  M.  T.  Zaro- 
chentzeff,  secretary  of  the  Moscow  Refrigerating  Committee,  and  reported 
in  Daily  Commerce  Reports,  Washington,  June  18,  1918,  p,  1064. 


220 


COLD  STORAGE 


Fig.  44. — Fresh  pork  in  cold  storage  in  Chicago. 


Fig.  45. — Direct  refrigeration  system  of  a  large  cold  storage  warehouse  in  Chicago. 


of  food  preservation.  It  seems  to  be ,  an  established  fact  that 
food  entering  into  cold  storage  in  good  condition  is  normally 
delivered  from  cold  storage  in  the  regular  course  of  business  in 


EFFECT  OF  COLD  STORAGE  ON  PRICES  221 

good  condition.  Professor  William  T.  Sedgwick,  Massachusetts 
Institute  of  Technology,  testifying  October  24,  1911,  before  the 
hearings  on  cold  storage,  conducted  by  the  Massachusetts  Com- 
mission to  Investigate  the  Subject  of  Cold  Storage  of  Food  and 
of  Food  Products  kept  in  Cold  Storage,  spoke  in  part  as  follows: 

"So  far  as  I  am  aware,  there  is  no  evidence  whatever  that  cold  storage 
is  in  any  way  prejudicial  to  the  pubUc  health.  On  the  contrary,  it  is  one  of 
the  greatest  aids  to  pubHc  health,  in  that  it  makes  food  more  abundant,  and 
thus  enables  people  to  keep  up  their  strength  and  to  avoid  such  diseases  as 
scurvy,  from  which  the  human  race  formerly  suffered  so  intolerably.  Various 
allegations,  of  course,  have  been  made  touching  the  wholesomeness  of  cold 
storage  materials,  such  as  that  deterioration  takes  place  during  cold  storage, 
whereby  people  are  poisoned  or  otherwise  badly  affected,  but  I  have  yet  to 
hear  of  a  single  instance  of  carefully  investigated  and  well-authenticated  food 
poisoning  due  to  the  effects  of  cold  storage,  to  deterioration  during  proper 
cold  storage.  I  have  myself,  hke  everybody  else,  repeatedly  consumed  cold 
storage  materials,  and  while  I  am  ready  to  admit  that  the  flavor  is  sometimes 
changed,  and  not  always  for  the  better,  I  do  not  know  of  any  well-authenti- 
cated, carefully  investigated  case  of  food  poisoning,  or  other  ill  effects,  due 
distinctly  to  cold  storage." 

From  the  above  testimony,  and  from  that  of  other  qualified 
persons,  the  conclusion  seems  fair  that  cold  storage  has  no  ill 
effects  on  public  health. 

Effect  of  Cold  Storage  on  Prices. — It  is  charged  that  cold  stor- 
age lends  itself  to  speculation  in  food  products.  The  charge  con- 
tains an  element  of  truth.  Any  person  who  buys  food  products 
and  holds  them  for  sale  at  a  rise  in  price  is  a  speculator.  This 
form  of  speculation  is  both  legitimate,  and,  as  marketing  is 
now  organized,  necessary  and  inevitable.  Back  of  the  charge, 
however,  is  the  implication  that  there  is  too  much  illegitimate 
speculation,  meaning  thereby  price  manipulation  and  cornering 
of  the  market.  Any  intentional  cornering  of  the  market  is  to  be 
thoroughly  condemned.  But  looking  at  the  actual  facts  of  the 
case,  there  seem  to  be  fewer  cases  of  cornering  the  market  under 
our  present  cold  storage  system  than  there  were  before  the  days 
of  cold  storage.  A  large  per  cent  of  our  present  cold  storage  is 
what  is  known  as  public  storage.  This  means  that  the  food  in 
these  warehouses  does  not  belong  to  the  owner  of  the  warehouse 
but  to  many  competing  dealers.  For  instance,  consider  the  case 
of  the  Quincy  Market  Cold  Storage  and  Warehouse  Company, 
the  largest  in  existence.  Here  the  number  of  persons  storing  goods 
was  found  to  be  over  3,000,  when  an  inquiry  was  recently  made  by 
the  Massachusetts  Cold  Storage  Commission.  A  combination  in 
such  a  case  to  control  prices  or  corner  the  market  would  be  difficult. 

It  is  difficult  to  state  definitely  the  effect  of  cold  storage  on 


222  COLD  STORAGE 

the  price  level  of  food  products.  It  is  obvious  that  the  first  effect 
is  to  make  prices  higher  to  both  producer  and  consumer  during 
the  three  or  four  months  of  heaviest  production,  and  to  make  the 
prices  lower  to  producer  and  consumer  during  the  season  of  lightest 
production.  In  other  words,  cold  storage  tends  to  equalize  prices 
during  the  year.  However,  there  is  a  larger  question  involved, 
and  one  not  easy  of  statistical  proof  or  disproof.  That  is,  the  effect 
of  higher  prices  on  production.  For  it  is  evident  that  the  producer 
does  find  a  larger  market  and  better  prices  during  the  heavy 
producing  season  when  his  surplus  is  disposed  of  for  cold  storage 
purposes.  The  necessary  effect  seems  to  be  that  cold  storage 
increases  production.  And  the  total  effect  of  this  increase  in 
production  is  to  lower  the  cost  of  living.  The  situation  was 
summed  up  by  the  Massachusetts  Commission  on  the  Cost  of 
Living,  1910,  in  these  words  (p.  179) : 

"Before  cold  storage  facilities  were  available,  during  the  time  of  plenty, 
prices  were  extremely  low  for  the  producer.  Conversely,  during  the  season 
of  scarcity  prices  rose  rapidly  and  were  extremely  high  to  the  consumer. 
Many  classes  of  perishable  products  were  not  procurable,  even  at  the  extreme 
prices.  The  cold  storage  warehouse  acts  as  a  balance.  It  insures  that  a  fair 
supply  of  the  products  of  plenty,  produced  in  their  seasons,  shall  be  available 
throughout  the  year.  It  materially  lessens  the  extreme  between  the  former 
minimum  and  maximum  selling  prices,  which  is  a  decided  advantage  to  both 
producer  and  consumer." 

Government  Regulation. — Little  attention  was  paid  to  the  cold 
storage  question  by  legislative  bodies  prior  to  1910.  The  period 
of  agitation  concerning  the  high  cost  of  Hving  had  succeeded  by 
that  time  in  focussing  public  attention  upon  several  real  or  imagin- 
ary causes,  and  the  cold  storage  was  hit  upon  as  one  of  these  causes. 
In  1911  five  States  passed  cold  storage  legislation;  these  were 
California,  Delaware,  Indiana,  New  Jersey,  and  New  York. 
Kansas  alone,  prior  to  this  date,  had  any  such  legislation.  These 
State  laws  have  to  do  with  these  subjects:  (1)  inspection  of  cold 
storage  warehouses;  (2)  marking  or  tagging  of  cold  storage  prod- 
ucts; (3)  limitation  of  the  time  of  cold  storage;  (4)  regulation  of 
the  sale  of  cold  storage  goods.  The  public  has  now  come  to  de- 
mand, and  the  warehousemen  to  expect  a  certain  amount  of  in- 
spection in  the  interests  of  public  health.  Beyond  this  activity, 
however,  the  wisdom  of  State  regulation  is  open  to  serious  ques- 
tion. The  situation  was  well  summed  up  by  a  cold  storage  com- 
pany of  Worcester,  Massachusetts,  in  reply  to  the  Cold  Storage 
Commission  of  that  State,  in  these  words: 

"The  local  board  of  health  makes  inspection  of  our  plant,  we  think,  about 
twelve  times  a  year.    We  do  not  think  there  is  much  need  of  legislation  on 


QUESTIONS  ON  THE  TEXT  223 

this  cold  storage  question,  as  self-protection  demands  that  goods  shall  not  be 
kept  too  long,  and  dealers  are  coming  to  reaUze  more  fully  each  year  that  it 
does  not  pay  to  hold  goods  too  long.  If  the  local  inspectors  would  inspect 
the  goods  when  they  go  into  storage,  it  would  do  a  great  deal  more  good  than 
any  new  laws  will  do."  ^ 

The  federal  government,  through  its  Bureau  of  Markets,  now 
makes  public  twice  a  month  the  total  holdings  of  food  products 
in  cold  storage  warehouses  in  the  United  States.  The  aim  is  to 
protect  the  public  and  the  dealers  by  wholesome  publicity.  If 
such  a  service  could  be  made  fairly  complete  as  to  actual  volume 
of  goods  in  cold  storage,  and  could  be  issued  promptly  it  would 
prove  helpful.  Extreme  deliberation  and  slowness  characterize 
most  governmental  activities,  and  this  one  may  or  may  not  prove 
an  exception.  However,  wholesome  publicity  of  this  kind  would 
afford  the  dealers  and  the  public  alike,  protection  against  undue 
manipulations  of  the  market. 

Suggested  Inprovements. — The  need  now  is  for  more  cold  stor- 
age, not  less.  The  large  centers  of  population  are  becoming  sup- 
pHed  with  cold  storage  facihties.  The  farmers  may  now  well 
consider  the  question  of  erecting  their  own  cold  storage  near  the 
sources  of  supply.  This  would  help  them  avoid  market  gluts  in 
the  early  marketing  season — an  annual  occurrence  under  present 
unorganized,  primary  marketing  conditions.  In  some  sections  of 
the  country  cooperative  fruit  packing  houses  are  equipped  with 
refrigerating  facilities.  Cold  storage  at  such  primary  points, 
together  with  precooling  of  perishable  foodstuffs  before  shipment, 
would  go  a  long  way  towards  eliminating  the  leaks  between  pro- 
ducer and  consumer,  leaks,  it  is  interesting  to  note,  that  the  pro- 
ducer now  charges  up  to  that  convenient  scapegoat — the  middleman. 

QUESTIONS  ON  THE  TEXT 

1.  Show  the  nature  and  importance  of  cold  storage. 

2.  Show  relation  of  cold  storage  to  seasonal  nature  of  food  production. 

3.  Name  the  two  chief  functions  of  cold  storage. 

4.  Show  relation  of  cold  storage  to  mobiHzation  of  our  food  resources  ia 

time  of  war. 

5.  Show  extent  and  use  of  cold  storage. 

6.  Classify  cold  storage  warehouses. 

7.  Name  the  chief  products  entering  cold  storage. 

8.  Give  amount  of  meat  in  cold  storage  June  1,  1919,  and  explain  the  large 

volume. 

9.  Show  the  growth  of  cold  storage  in  other  lands:  Sweden;  Russia;  Canada. 

10.  State  the  evidence  and  the  conclusions  as  to  the  effect  of  cold  storage  on 

health;  effect  on  prices. 

11.  Define  speculation,  and  distinguish  different  kinds. 

12.  Explain  in  detail  the  extent  and  value  of  government  regulation  of  cold 

storage.    Is  health  inspection  sufficient? 

2  Report,  Massachusetts  Commission  on  Cold  Storage,  Boston,  1912. 


224  COLD  STORAGE 

13.  Show  the  activities  of  the  United  States  Bureau  of  Markets  in  the  matter 

of  cold  storage. 

14.  Suggest  improvements  in  our  cold  storage  situation. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  What  per  cent  of  the  apple  crop  goes  into  cold  storage?    Of  the  butter 

production?    Of  farm  egg  production? 

2.  Prepare  a  chart  showing  total  cold  storage  in  your  State,  and  classify 

this  storage  as  to  whether  public,  private,  or  combined  public  and 
private. 

REFERENCES 

1.  Armour,  J.  OGDEN:*"The  Packers,  The  Private  Car  Lines  and  the 
People." 

2.  Holmes,  George  K.:  "Cold  Storage  Business  Features."  Bulletins 
93  and  101,  Bureau  of  Statistics,  United  States  Department  of  Agriculture. 
Washington,  1913. 

3.  Bell,  John  O.:  "Reports  of  Storage  Holdings  of  Certain  Food 
Products,"  Bulletin  709,  United  States  Department  of  Agriculture,  Wash- 
ington, 1918. 

4.  "Daily  Commerce  Reports,"  Washington,  June  13,  1918;  June  18, 1918. 

5.  "Reports  of  Massachusetts  Commission  on  Cold  Storage,"  Boston, 
1912. 

6.  Cooper,  Madison:  "Use  of  Cold  Storage,"  61  Cong.  2  Sess.  Sen.  Doc. 
486,  pp.  4,  5. 

7.  Pennington,  M.  E.:  "Changes  Taking  Place  in  Chickens  in  Cold 
Storage."    Yearbook  of  Agriculture,  Washington,  1907,  p.  206. 

8.  Lane,  Clarence  B.:  "The  Cold  Storage  of  Cheese,"  Bulletin  83; 
Bureau  of  Animal  Industry,  United  States  Department  of  Agriculture,  Wash- 
ington, 1906. 

9.  Gray,  C.  E.:  "The  Keeping  of  Butter  Made  Under  Different  Condi- 
tions and  Stored  Under  Different  Temperatures,"  Bulletin  84,  Bureau  of 
Animal  Industry,  United  States  Department  of  Agriculture,  Washington,  1906. 

10.  "Report  of  Massachusetts  Commission  on  the  Cost  of  Living," 
Boston,  1910. 

11.  Groesbeck,  B.  and  Urner,  F.  G.  :  "Economic  Effects  of  Cold 
Storage  Upon  the  Average  Price  of  Eggs."  Joint  Committee  Cold  Storage 
Warehousemen  and  Affihated  Industries,  New  York,  1916. 

12.  Jenkins,  W.  C:  "The  Truth  About  Cold  Storage,"  National  Maga- 
zine, August,  1911. 

13.  "Report  of  Investigation  Relative  to  Wages  and  Prices  of  Commodi- 
ties, Senate  Committee  on  Wages  and  Prices  of  Commodities,"  61  Cong.  1910. 

14.  "Findings  of  the  Joint  Select  Committee  of  the  78th  General  Assembly 
of  the  State  of  Ohio,  Appointed  to  Inquire  into  the  Purchase,  Storage,  Sale 
of  and  Traffic  in  Food  Products,  Commodities  and  Supplies."    Columbus,  1910. 

15.  "Report  of  the  Industrial  Commission,"  Washington,  1898-1902, 
Vol.  6,  pp.  297-307. 

16.  "Report  of  London  County  Council  on  Ice  and  Cold  Storage," 
London,  1904. 

17.  Proceedings  of  the  National  Poultry,  Butter  and  Egg  Association" 
(Annual  meetings). 

18.  "Proceedings  of  the  American  Warehousemen's  Association"  (Annual 
meetings). 

19.  Franklin.  I.  C:  "The  Service  of  Cold  Storage  in  the  Conservation 
of  Foodstuffs."    Yearbook  Department  of  Agriculture,  1917,  363-371. 

20.  "Cold  Storage  in  Canada,"  Labor  Gazette  (Canada),  August,  1917; 
also  International  Review  of  Agricultural  Economics,  Dec,  1917,  53-66. 


CHAPTER  XV 

AGRICULTURAL  PRICES  AND  VALORIZATION 

There  is  lack  of  agreement  among  men  of  affairs  and  among 
professional  economists  as  to  the  factors  which  actually  do  determine 
price,  or  the  factors  which  should  determine  price.  As  to  the  factors 
which  should  determine  price  there  are,  roughly  speaking,  two 
schools  of  thinkers,  those  who  incUne  to  the  beUef  that  prices 
should  be  artificially  determined  by  some  social  authority,  and  those 
who  incline  to  the  behef  that  prices  should  be  left  to  the  play  of 
economic  forces  of  supply  and  demand.  Price  history,  however, 
is  a  more  fruitful  field  to  explore  at  this  point  than  is  price  theory. 

Do  Agricultural  Prices  Fluctuate  According  to  the  Law  of 
Supply  and  Demand? — The  demand  side  of  the  market  is  difficult 
to  trace,  for  the  market  reports  now  prove  that  the  demand  for 
staple  products  is  never  constant.  The  supply  side,  however, 
may  be  traced  by  tabulating  the  yields  for  a  series  of  years.  The 
question  then  resolves  itself  into  this :  Do  prices  go  up  and  down  as 
yields  go  down  and  up?  Many  tables  of  statistics  have  been  pub- 
lished on  this  subject,  but  the  figures  collected  and  published  by 
the  federal  government  are  doubtless  most  widely  accepted. 

The  following  diagram  is  a  reproduction  of  one  prepared  by 
the  Bureau  of  Crop  Estimates,  and  covers  crop  yields  per  acre 
and  crop  prices  for  fifty  years.^  This  table  shows  strikingly  that 
prices  tend  to  advance  when  yields  decline,  and  to  decline  when 
yields  increase.  Ten  crops  are  combined,  namely,  wheat,  corn, 
oats,  barley,  rye,  buckwheat,  potatoes,  hay,  cotton,  and  tobacco. 
Prices  and  yields  of  each  crop  are  reduced  to  their  percentage  of 
the  fifty-year  averages  (Fig.  46.) 

Are  Agricultural  Prices  Higher  in  the  Spring  than  in  the  Fall? — 
In  many  popular  discussions  of  the  ''middleman" — particularly 
in  political  campaign  oratory — the  middleman  is  pictured  as 
storing  or  ''hoarding"  food  supplies  in  the  fall  of  the  year,  when 
they  are  cheap,  and  selling  them  in  the  spring  when  prices  are  high. 
Or,  put  in  another  way,  the  unhappy  farmer  must  hurry  his  crop 
to  market  as  soon  as  harvested  in  the  fall,  in  order  to  pay  his 
debts,  and  in  this  manner  sells  it  at  big  sacrifice  in  price.  Then, 
the  story  runs,  this  same  farmer  often  is  forced  to  buy  back  part 
of  his  supplies  in  the  spring  at  a  greatly  enhanced  price. 

1  Monthly  Crop  Report,  Washington,  February,  1917,  p.  16. 
15  225 


226 


AGRICULTURAL  PRICES  AND  VALORIZATION 


One  of  those  strange  popular  fallacies  which  persist  through 
the  years  is  this  one  that  the  price  of  the  important  agricultural 
products  is  lowest  in  the  fall  when  the  farmers  sell  the  bulk  of 
the  crop.  An  interesting  study  of  this  subject  was  made  by  an 
economist,  J.  E.  Pope,  and  published  under  the  title,  ''Can  the 
farmer  realize  higher  prices  for  his  crops  by  holding  them?"^ 
After  studying  the  variation  in  the  monthly  prices  of  important 
agricultural  products,  the  cost  of  storage,  interest,  shrinkage,  loss 
and  damage,  and  other  expenses  of  holding  the  crops,  he  concludes 
that  in  the  long  run  it  will  not  pay  the  farmer  to  hold  his  crops. 


IB 


fSU     /670       /87S      /sgo       fPffS      /S9o       fff9^     /9oo       ^0^^'      /9fo       ^9/r 


Fig.  46. — Trend  of  farm  prices  and  yield  per  acre  of  crops  combined.  100  represents  the 
average  of  50  years,  1866-1915. 


Further  light  is  thrown  on  this  question  by  an  examination  of 
the  price  ranges  on  the  Chicago  market  of  wheat,  corn  and  oats 
for  the  past  fifty  years  and  more,  taking  into  consideration  the 
months  when  lowest  prices  were  reached  and  the  months  when 
highest  prices  were  reached.    See  charts  in  Appendix  to  this  chapter. 

Interpreting  these  charts,  we  find  that  in  the  case  of  wheat  the 
high  price  of  the  year  was  reached  in  the  six  months  following 
harvest  in  24  years  out  of  51,  and  that  the  low  price  was  reached 
33  times  in  the  six  months  following  harvest.  This  indicates  that  a 
farmer  would  do  about  as  well  by  selling  his  wheat  at  or  near 
harvest  time  as  by  holding  it  for  six  months  or  over. 

^Qiuirterly  Journal  of  Economics,  Vol.  30,  pp.  805-831. 


SOME  PRICE  THEORY  ^27 

In  the  case  of  corn  during  52  years,  the  low  price  was  reached 
45  times  in  the  six  months  following  harvest,  and  the  high  price 
was  reached  19  times  in  the  same  six  months. 

In  the  case'  of  oats  for  52  years,  the  low  price  was  reached  37 
times  in  the  six  months  following  harvest,  and  the  high  price  was 
reached  23  times  in  the  same  six  months. 

Some  Price  Theory. — ^The  generally  accepted  principle  or 
theory  of  price  is  that  supply  and  demand  determine  price.  This 
theory  generally  presupposes  the  free  play  of  competition.  There 
can  be  no  doubt  that  supply  and  demand  are  the  basic  factors  in 
determining  price.  These  are  the  most  powerful  and  most  per- 
manent factors.  Supply,  however,  may  be  temporarily  cornered, 
or  monopolized.  Demand  may  be  artificially  stimulated.  For 
the  consumers '  wants  are  based  to  a  great  extent  on  whims  and 
fancies  rather  than  on  any  rational  consideration.  Custom  and 
bargaining  power  are  two  very  significant  factors  in  price  making. 
That  supply  and  demand  are  the  basic  factors  in  price  fixing, 
however,  is  shown  by  our  own  economic  history.  Large  yields 
have  meant  lower  prices,  and  short  yields  have  meant  higher  prices. 
Yet  it  is  obvious  that  only  within  large  limits  do  supply  and 
demand  fix  the  price.  It  may  be  said  that  supply  and  demand  fix 
the  upper  and  lower  limit  of  price,  and  between  these  limits  the 
actual  price  is  set  by  other  factors.  Or,  to  put  it  another  way, 
supply  and  demand  stake  out  a  prize  ring,  and  within  this  ring 
other  factors  such  as  custom  and  bargaining  fight  out  the  actual 
price.  Thus  supply  and  demand  may  fix  the  price  of  the  bean 
crop  to  the  Michigan  farmer  between  four  dollars  and  six  dollars 
a  bushel.  The  actual  price  may  be  set  at  five  dollars,  especially 
if  the  farmers  have  a  strong  enough  organization  to  bargain  for 
themselves  collectively.  The  power  of  the  stronger  bargainer  to 
influence  price  is  well  illustrated  by  the  story  of  General  Grant, 
as  told  by  himself,  when  he  once  bought  a  twenty-dollar  colt  for 
twenty-five  dollars.^ 

3  "There  was  a  Mr.  Ralston  living  within  a  few  miles  of  the  village,  who 
owned  a  colt  which  I  very  much  wanted.  My  father  had  offered  twenty  dollars 
for  it,  but  Ralston  wanted  twenty-five.  I  was  so  anxious  to  have  the  colt,  that 
after  the  owner  left  I  begged  to  be  allowed  to  take  him  at  the  price  demanded. 
My  father  yielded,  but  said  twenty  dollars  was  all  the  horse  was  worth,  and 
told  me  to  offer  that  price;  if  it  was  not  accepted  I  was  to  offer  twenty-two 
dollars  and  a  half,  and  if  that  would  not  get  him,  to  give  twenty-five  dollars. 
I  at  once  mounted  and  went  for  the  colt.  When  I  got  to  Mr.  Ralston 's  house,  I 
said  to  him :  '  Papa  says  I  may  offer  you  $20  for  the  colt,  but  if  you  won't  take 
that  I  am  to  offer  you  $22.50,  and  if  you  won't  take  that,  to  give  $25.'.  .  ^  I  kept 
the  horse  till  he  was  four  years  old,  when  he  went  blind,  and  I  sold  him  for 
$20."— Gran^,  U.  S.,  Personal  Memoirs,  2  vols.,  New  York,  1885,  Vol.  1,  p.  29. 


228  AGRICULTURAL  PRICES  AND  VALORIZATION 

In  the  organized  markets,  such  as  the  grain  exchanges,  and 
cotton  exchanges,  the  market  price  is  set  by  a  bargaining  process, 
where  both  sides — buyers  and  sellers — are  fairly  equal  in  strength 
and  in  knowledge  of  the  supply  and  demand  factors.  But  as  the 
market  becomes  more  decentralized,  more  local,  and  more  unorgan- 
ized, the  factors  of  bargaining  power  and  custom  gain  more  import- 
ance and  the  limits  set  by  supply  and  demand  spread  farther 
apart — the  ring  becomes  larger. 

A  "Just  Price." — lb  is  likely  that  the  individual  farmer's  weak- 
ness as  a  bargaining  factor  in  price  fixing  has  given  rise  to  con- 
siderable discontent  and  suspicion  towards  the  market  on  the  part 
of  the  farmer.  He  feels  that  certain  "middlemen"  who  merely 
''handle"  his  product  have  grown  wealthy.  So  the  farmer  comes 
to  picture  to  himself  an  economic  system  wherein  ''big  business" 
has  waxed  fat,  in  sloth  and  ease,  by  exploiting  the  farmer  and 
keeping  him  toiling  at  his  hard  and  strenuous  tasks.  Of  course 
this  picture  leaves  out  of  view  the  many  "middlemen"  who  have 
failed  in  their  enterprises  and  lost  their  capital,  and  also  leaves 
out  that  other  consideration,  namely,  that  the  successful  "middle- 
men," surviving  strong  competition,  do  it  by  supplying  a  service. 
Some  destructive  agitators  tell  the  farmers  to  abolish  "big  busi- 
ness." Some  advisers  tell  them  to  organize,  bargaining  collec- 
tively, and  thus  conduct  big  business  themselves.  It  is  interesting 
to  note  in  this  connection  that  in  western  Canada  where  the  farmers 
have  scored  such  a  success  along  cooperative  lines  through  their 
United  Grain  Growers  Company  (see  page  165)  the  consumers 
are  already  applying  to  these  farmers  such  appellations  as  "big 
business"  and  "profiteers."^  It  is  no  wonder,  therefore,  that  in 
the  existing  confusion  concerning  price  making  and  price  ethics, 
more  and  more  voices  are  being  raised  asking  for  governmental 
interference  in  price  fixing  or  actual  price  fixing  by  the  govern- 
ment. This  demand  for  a  "just  price"  is  easy  to  comprehend. 
But  "letting  the  Government  do  it"  is  a  solution  which  may  not 
be  as  easy  and  simple  as  many  a  person  seems  to  think.  Price 
fixing  by  the  government  as  a  war  measure,  but  not  as  an  economic 
measure,  was  thoroughly  tested  in  the  World  War,  by  Germany, 
Italy,  France,  England,  United  States,  and  other  countries.  The 
policy  was  tried  and  adhered  to,  as  part  of  the  military  strategy 
of  the  warring  country.  As  an  economic  measure  it  was  admittedly 
clumsy  and  wasteful,  and  did  not  result  in  "just  prices" — prices 

^  Debate  in  House  of  Commons,  Ottawa ;  See  Grain  Growers  Guide, 
Winnipeg,  July  2,  1919. 


JUST  PRICE;  FAIR  PRICE;  EQUILIBRIUM  PRICE         229 

fair  to  producer  and  consumer.  Since  "regulation  begets  regula- 
tion," these  price-fixing  measures  entailed  the  need  of  government 
regulation  of  consumption  and  production.  But  as  a  war  measure 
they  were  borne  cheerfully  by  all  parties. 

Price  fixing  affects  first  of  all  the  demand  side  of  the  market, 
not  the  supply  side.  Thus,  fixing  thepri-ce  low  increases  consump- 
tion (and  decreases  production,  in  the  end);  fixing  prices  high 
lessens  consumption  (and  increases  production  in  the  end).  Thus 
the  Federal  Food  Administration  in  the  United  States,  in  1917, 
fixed  the  price  of  wheat  at  a  low  -figure,  compared  with  its  market 
value,  thus  stimulating  the  consumption  of  wheat.  This  led  to 
the  regulation  of  consumption  also,  and  finally  to  an  extensive 
system  of  rationing.  In  other  words,  the  control  of  demand  led 
to  an  attempt  at  control  of  supply,  first  of  one  product,  then  of 
other  products.  Each  added  .regulation  begot  another  regulation. 
Regulation  had  extended  only  to  the  necessaries  of  life  when  the 
war  closed.  Concerning  the  non-essential  industries,  Professor 
Warren  made  this  pertinent  comment. 

"The  present  policy  of  regulation  of  prices  of  necessities  is  working  about 
as  follows:  The  cost  of  living  is  lower  than  it  would  be.  This  leaves  more 
money  to  spend  for  luxuries.  The  luxuries  rise  in  price.  The  manufacturers 
3f  luxuries  pay  better  wages.  Labor  is  attracted  from  farms  and  other  regu- 
lated industries."  ^ 

This  is  a  good  illustration  of  how  the  consimaer's  clamor  for 
cheap  food,  when  headed  by  a  price  fixing  body,  may  actually 
result  in  food  scarcity  by  diminishing  production. 

Just  Price;  Fair  Price;  Equilibrium  Price. — The  terms  "just 
price"  and  ''fair  price,"  have  no  clear-cut  definition  in  the  popular 
mind.  As  viewed  from  the  individual  producer's  viewpoint,  a  fair 
price  connotes  a  price  rewarding  him  for  all  his  costs  of  production. 
But  this  cannot  be  the  social  viewpoint,  since  many  commodities 
produced  do  find  a  demand  at  a  price  much  above  cost  of  produc- 
tion, and  others  do  not  find  a  demand  strong  enough  to  cover  cost 
of  production.  In  other  words,  there  is  a  class  of  marginal  pro- 
ducers, producing  at  cost,  and  there  is  a  class  of  sub-marginal  pro- 
ducers putting  the  product  on  the  market  at  less  than  cost.  As 
viewed  by  society,  a  just  price  is  that  price  which  will  maintain  the 
industry  or  enterprise  which  society  wants  maintained.  Does  a  big 
city  want  a  supply  of  fresh  milk?  Then  it  must  pay  the  price  which 
will  maintain  the  dairy  industry — the  dairy  enterprises  of  the  indi- 

^  Reprint  from  the  Proceedings  of  the  American  Farm  Management 
Association,  December,  1917;  The  Food  Supply,  G.  F.  Warren,  p.  18. 


230  AGRICULTURAL  PRICES  AND  VALORIZATION 

vidual  farmers  who  produce  the  supply  needed.  Obviously  the 
cost  of  production  of  milk  varies  from  farm  to  farm,  and  on  the 
same  farm  from  month  to  month  and  from  year  to  year.  The  city 
must  pay,  not  only  for  the  cheapest  portion  of  milk  produced,  but 
the  whole  supply,  including  the  marginal  milk,  i.e.,  the  milk  pro- 
duced at  greatest  expense.  For  instance,  if  fifty  farmers  can  produce 
milk  at  10  cents  a  quart,  and  fifty  farmers  can  produce  milk  at 
8  cents  a  quart,  the  city  must  and  will  pay  these  one  hundred 
farmers  ten  cents  a  quart,  if  the  supply  of  these  100  farmers  is 
consumed  by  the  city.  That  is,  the  city  will  pay  ten  cents  a  quart 
if  it  wants  to  keep  up  its  customary  supply  of  milk.  A  "fair 
price"  maintains  the  most  expensive  units  of  the  supply;  other- 
wise this  part  of  the  supply  is  not  forthcoming,  and  the  pric^  will 
rise  with  the  fall  in  supply  till  the  demanded  supply  is  forthcoming. 
One  danger  in  price  regulation  by  any  commission  is  the  ignoring 
of  the  economic  law  of  marginal  production  and  marginal  utility. 
Any  price  control  is  likely  to  stimulate  consumption  and  reduce 
production.  Price  fixing  on  the  ''average  cost  of  production"  is 
a  foredoomed  failure,  even  if  it  be  not  a  calamity.  Thus  average 
cost  of  producing  crops  commonly  ignore  the  factor  of  abandoned 
acreage.  In  1917,  31  per  cent  of  the  winter  wheat  acreage  was 
abandoned.  In  Nebraska,  75  per  cent  was  abandoned.^  The 
average  cost  of  producing  milk  ignores  that  portion  produced  at 
a  loss.  A  Tompkins  County,  New  York,  survey  contains  this 
statement:  "Cows  are  the  most  profitable  kind  of  live  stock  in 
the  county,  but  the  average  cow  does  not  pay.  A  very  large  pro- 
portion of  the  cows  are  being  kept  at  a  loss.  The  most  profitable 
farms  are  keeping  cows  that  give  50  per  cent  more  than  the  aver- 
age cow."  ^  Yet  the  city  consumes  the  milk  from  the  average 
cow,  and  pays  for  it.  And  the  price  paid  is  the  same  as  for  milk 
from  cows  above  the  average.  In  short,  if  milk  from  the  "marginal 
cow  "  is  wanted,  a  fair  price  must  pay  for  this  marginal  milk,  and 
so  also  for  any  other  marginal  product. 

Price  Fixing,  in  Practice. — In  recent  years,  due  to  the  develop- 
ment of  the  cooperative  movement  among  farmers  and  their  con- 
comitant advance  in  collective  bargaining  power,  there  have  been 
many  cases  of  price  fixing  by  representative  groups  of  farmers 
bargaining  with  representatives  of  the  distributors,  or  with  a  com- 

^  United  States  Department  of  Agriculture  Monthly  Crop  Report,  May, 
1917,  p.  38. 

^  Bulletin  295.  Cornell  University,  College  of  Agriculture,  March  1911, 
p.  564. 


COLLECTIVE  BARGAINING  BY  CALIFORNIA  GROWERS    231 

mission  representing  the  consumer.  Thus  the  Dairymen's  League, 
in  the  New  York  City  territory,  has  for  some  years  fixed  the  price 
of  Hquid  milk  by  bargaining  with  the  large  distributors.  The 
Wisconsin  Milk  Commission  of  October  1917  fixed  the  price  of 
milk  for  the  Chicago-Milwaukee  district.  In  most  efforts  at 
price  fixing  cost  of  production  is  assumed  to  be  the  correct  basis 
of  price.  But  in  practice  it  is  found  impossible  to  ignore  the  de- 
mand side  of  the  question.-  Furthermore  the  cost  of  production 
varies  so  much  from  farm  to  farm  and  from  year  to  year  on  the 
same  farm  that  it  is  not  a  definite  and  clear-cut  item.  One  of 
the  sanest  discussions  of  this  complex  matter  is  that  of  Professor 
H.  C.  Taylor  of  the  University  of  Wisconsin,  in  his  bulletin  en- 
titled "Price  Fixing  and  the  Cost  of  Farm  Products."  ^  In  this 
he  develops  the  theory  of  joint  costs  for  farm  crops,  showing  that 
certain  crops  have  a  joint  cost — like  gasoline  and  kerosene — and 
that  the  selling  price  varies  as  the  demand  varies — just  as  the 
price  of  gasohne  in  1918  was  nearly  twice  as  high  as  that  of  kero- 
sene although  the  two  were  produced  at  a  common  cost.  Professor 
Taylor's  conclusions  are  that  when  Price  Commissions  attack  the 
problem  of  price  fixing  they  ought  to  consider  the  demand  side 
along  with  the  price  side  and  thus  endeavor  to  keep  supply  and 
demand  balanced,  that  is,  they  ought  to  aim  at  an  "equilibrium 
price."  Ought  not  the  farmer  to  ask  for  an  "equilibrium  price" 
rather  than  a  "just  price"?  Professor  Taylor  further  concludes 
that  a  Price  Commission  might  function  wisely  as  a  mere  medium 
for  collective  bargaining.  Illustrating  the  principle  of  collective 
price  fixing,  and  its  relation  to  cost-of-production  and  to  demand, 
two  examples  from  California  may  be  cited. 

Collective  Price  Fixing  by  California  Walnut  Growers.'  Fixing  the 
"Offering  Price." — "The  prices  of  the  various  grades  of  walnuts  produced 
by  the  California  growers  must  necessarily  be  based  upon  the  law  of  supply 
and  demand.  If  prices  are  set  so  high  as  to  prevent  normal  consumption  a 
carryover  must  necessarily  result,  which  always  tends  to  demoralize  the  market 
and  makes  necessary  a  material  price  reduction.  In  order  to  move  an  entire 
crop  valued  at  from  five  to  seven  miUion  doUars  within  a  period  of  two  months, 
and  to  move  it  as  fast  as  the  goods  are  packed  and  ready  for  shipment  and  at 
an  absolutely  uniform  price,  it  is  necessary  that  that  price  be  a  trifle  under 
what  is  absolutely  justified  by  the  laws  of  supply  and  demand,  for  if  the  whole- 
sale purchaser  cannot  figure  on  a  sUght  advance  in  price  as  the  season  wears 
on  he  will  purchase  only  his  minimum  requirements  and  will  not  stock  up 
with  several  months'  supply,  but  will  purchase  hghtly  at  first,  forcing  the 
growers  to  store  such  goods  as  are  not  necessary  for  immediate  consumption, 

^Agricultural  Experiment  Station,  University  of  Wisconsin,  Madison, 
Wisconsin.  Bulletin  292,  May,  1918. 

^  Cahfornia  Walnut  Growers  Association,  General  Report,  April  30,  1918, 
pp.  34,  35.  f    ,     t-         ,         y 


232  AGRICULTURAL  PRICES  AND  VALORIZATION 

and  the  wholesaler  will  buy  later  and  usually  at  a  lower  figure.  The  method 
now  pursued  in  determinmg  the  proper  prices  is  through  advices  received 
from  salaried  agents  that  the  Association  maintains  in  France  and  Italy,  the 
principal  countries  producing  walnuts  which  come  into  competition  with  the 
California  line.  Advices  are  constantly  received  through  these  agents  as  to 
the  extent  of  the  foreign  crops,  the  quahty,  prices  being  paid,  whether  the 
harvest  is  early  or  late,  etc.  The  Association's  sales  department  then  gathers 
all  possible  information  regarding  the  consumer's  demand  in  America.  Accurate 
estunates  of  both  domestic  and  foreign  walnuts  carried  over  in  this  country 
are  secured,  the  purchasing  power  of  the  nation  considered,  then  a  careful 
and  accurate  estimate  of  the  quantity  and  quality  of  the  California  crop  is 
made,  and  all  of  these  matters  laid  before  the  board  of  directors  about  the 
time  the  shipping  campaign  opens.  The  directors  first  examine  and  crack 
samples  of  walnuts  gathered  from  practically  all  districts,  and  determine  the 
average  percentage  of  sound  merchantable  nuts  that  can  be  guaranteed  to 
the  purchasers  of  Diamond  Brand  goods.  They  then  consider  all  factors 
that  enter  into  the  value  of  the  product,  and  name  prices  at  which  the  Asso- 
ciation's various  grades  and  brands  of  walnuts  will  be  offered  the  trade.  And 
for  reasons  above  stated,  these  prices  must  be  shghtly  below  the  fi^re  justi- 
fied by  the  actual  supply  and  demand  as  long  as  the  pohcy  of  sellmg  at  one 
uniform  price  throughout  the  entire  season  is  deemed  advisable." 

Collective  Price  Fixing  by  California  Almond  Growers.^" — "At  an  oppor- 
tune time  the  Association's  representatives  are  called  together  for  the  purpose 
of  considering  prices. 

"The  latest  information  as  to  the  foreign  and  domestic  crops,  as  well  as 
general  market  conditions,  is  fully  discussed. 

"  The  result  is  a  price  that  in  the  opinion  of  all  will  move  the  crop  promptly. 

"It  must  be  fully  understood  that  the  price  named  by  the  Exchange  is 
the  best  estimate  as  to  the  value  of  the  crop  to  be  harvested.  Later  market, 
financial  and  foreign  conditions  may  materially  raise  or  lower  that  value.  The 
Exchange  maintains  a  salaried  representative  in  Europe,  who  reports  from  time 
to  time  on  the  European  almond  crop,  and  market  conditions.  Thus  the 
Exchange  is  well  posted  on  world-wide  conditions  affecting  our  industry." 

A  very  illuminating  example  of  the  force  of  demand  in  fixing 
the  price  of  wheat  was  given  by  the  market  in  the  early  part  of 
the  year  1917.  In  Canada  and  in  the  United  States  the  farmers 
were  complaining  that  the  spread  in  price  between  different 
grades  of  wheat — one  dollar  and  over — ^was  too  great  and  was 
not  justified  by  miUing  values  or  any  other  economic  conditions. 
The  companies  dealing  in  wheat  accordingly  were  blamed.  Yet, 
when  the  facts  were  once  clearly  stated,  it  was  understood  that 
economic  factors  did  account  for  this  wide  spread.  The  situation 
was  explained  to  the  Manitoba  Grain  Growers  Association  at  their 
14th  Annual  Meeting  by  Robert  Magill,  former  Chairman  of  the 
Canadian  Grain  Commission,  in  the  following  succinct  manner:  ^^ 

"  Russian  supply  is  cut  off.  India,  the  Argentine,  and  Austraha  are  too  far 
away.   Several  trips  could  be  made  to  America  for  one  to  the  former  countries. 

1°  Report  for  1918,  California  Almond  Growers  Exchange. 
"  Magill,  Robert,  14th  Annual  Meeting  Manitoba  Grain  Growers,  Bran- 
don, January  10,  1917.    Grain  Growers  Guide,  Winnipeg,  January  17,  1917. 


VALORIZATION  IN  BRAZIL  233 

"The  Allies  Wheat  Commission  in  London  do  all  the  buying  on  this 
continent,  and  have  only  one  buyer  on  this  side.  Everything  must  pass 
through  his  hands.  The  aUies  want  no  wheat  but  that  which  will  make  the 
most  loaves,  and  the  lack  of  tonnage  makes  it  imperative  that  they  take  only 
the  higher  grades. 

"Thus  no  market  is  left  for  our  grades  below  No.  4,  and  the  spreads  are 
enormous  between  these  and  the  higher.  Even  at  that,  many  companies  are 
losing  money." 

Summary  on  Cost  of  Production  and  Price. — The  present  agra- 
rian demand  that  price  of  farm  products  be  fixed  on  the  basis  of 
cost  of  production  plus  a  reasonable  profit  is  only  in  part  sound; 
it  contains  one  element  of  weakness  by  overlooking  the  demand 
side  of  the  market.  The  manufacturer  who  knows  his  cost  of 
production  aims  to  sell  at  a  certain  margin  above  this  cost.  How- 
ever, if  demand  falls  off  he  must  seek  to  lower  his  cost  of  produc- 
tion, stimulate  the  demand,  or  both.  Inefficient  manufacturers 
are  constantly  failing  and  being  weeded  out ;  and  successful  manu- 
facturers do  at  times  market  a  part  of  their  production  at  less 
than  cost.  The  same  principles  hold  out  in  agriculture.  All 
farmers  ought  to  know  their  production  costs  so  far  as  possible. 
However,  when  consumers  refuse  to  buy  the  product  of  the  ineffi- 
cient farmer  at  the  cost-of-production-plus-a-profit  basis,  such  a 
farmer  is  in  the  same  position  as  the  inefficient  manufacturer. 
Cost  of  production,  therefore,  should  be  one  fundamental  factor 
in  price  making,  but  not  the  sole  factor.  Otherwise  an  equi- 
librium price  is  not  established.  And  a  surplus  or  a  shortage 
may  result.  The  *'cost-of -production"  price  always  fails  when 
a  surplus  is  produced. 

For  governmental  interference  in  price  fixing  in  ordinary 
times,  and  the  results  to  the  producer  and  consumer,  we  may 
wisely  turn  to  Brazil  and  the  so-called  Valorization  of  Coffee. 

Valorization  in  Brazil. — Valorization  is  defined  in  our  consular 
reports  as  '' giving  by  law  a  fictitious  or  artificial  value  above  or 
apart  from  the  normal  or  ordinary  market  value."  The  valoriza- 
tion of  coffee  was  a  plan  carried  out  by  Sao  Paulo,  a  State  in  Brazil, 
to  enhance  the  market  price  of  coffee.  The  world's  coffee  consump- 
tion is  about  18,000,000  bags  a  year.  Most  of  this  coffee  comes 
from  Brazil.  The  United  States  consumes  80  per  cent  of  the  Brazil 
crop.  An  extra  large  crop  in  1901  brought  disaster  to  many 
planters  in  Sao  Paulo,  the  principal  coffee  growing  State  in  Brazil. 
In  1906,  the  date  the  valorization  scheme  was  developed,  another 
big  crop  threatened  to  reduce  prices  below  cost  of  production. 
The  yield  was  20,000,000  bags  in  Sao  Paulo — more  ttian  five- 
sixths  of  the  world's  supply.     Hence  the   plan  was  developed 


234  AGRICULTURAL  PRICES  AND  VALORIZATION 

and  carried  out  for  having  Sao  Paulo  enter  the  market,  buy  up 
enough  coffee  to  secure  a  partial  corner  of  the  market,  and 
thus  enhance  the  price.  At  the  same  time  an  effort  was  made 
to  prevent  over-production  in  the  next  few  years  by  keeping 
down  any  increase  in  acreage.  A  heavy  tax  was  levied  on  new 
acreage.  In  this  manner,  both  the  supply  and  demand  factors 
were  to  be  regulated. 

Past  experience  had  taught  that  a  big  coffee  crop  was  usually 
followed  by  a  series  of  short  crops.  Coffee  is  not  a  perishable 
product,  but,  like  wheat,  may  be  carried  over  for  several  years. 
Hence,  a  surplus  bought  by  the  State  could  be  gradually  worked 
off  in  succeeding  years  without  disturbing  prices.  Thus  it  came 
about  that  Sao  Paulo  borrowed  the  funds^  entered  the  coffee 
market  as  a  buyer,  and  bought  10,000,000  bags,  aiming  by  this 
partial  corner  to  maintain  the  domestic  market  price  at  a  minimum 
of  7.9  cents  per  pound.  Before  putting  the  scheme  into  operation, 
the  minimum  price  was  set  at  13.2  cents.  Such  a  gigantic  scheme 
as  this  required  many  tens  of  millions  of  dollars  to  finance  it. 
How  was  this  venture  financed?  How  was  this  State  coffee  mar- 
keted? What  were  the  effects,  beneficial  and  otherwise,  of  valor- 
ization?   These  three  questions  need  answering. 

Sao  Paulo  experienced  considerable  difficulty  in  securing  the 
necessary  funds  to  buy  and  hold  the  coffee.  Temporary  credits 
were  used  at  first.  An  arrangement  was  made  with  the  Brazilian 
Bank  for  Germany  for  the  discount  of  £81,000.  Next  a  loan  of 
£3,000,000  was  made  through  J.  Henry  Schroeder,  of  London,  and 
the  National  City  Bank  of  New  York.  A  loan  of  £3,000,000  was 
made  by  the  federal  government  of  Brazil,  under  contract  with 
N.  M.  Rothschild  &  Sons,  through  the  agency  of  Eugene  J.  J. 
HoUender,  Jr.  It  soon  became  necessary  for  Sao  Paulo  to  call 
upon  a  syndicate  of  bankers  to  take  charge  of  the  transaction  and 
hold  the  coffee  off  the  market.  It  was  also  necessary  to  have  the 
Republic  of  Brazil  guarantee  the  loan.  In  this  manner  £15,000,000 
was  borrowed  from  the  bankers.  These  powerful  financiers  de- 
manded certain  liberal  terms  for  themselves,  both  in  regard  to 
financing  the  plan  and  in  the  marketing  of  the  coffee.  This  loan 
was  to  run  10  years  (to  January  1,  1919),  and  to  be  used,  "For  the 
completion  of  the  measures  necessary  for  the  defense  of  coffee, 
and  for  the  conversion  into  a  consolidated  debt  of  the  various 
temporary  operations  undertaken  with  the  same  object  in  view." 
It  is  interesting  to  note  that  in  the  preliminary  arrangements  con- 
cerning the  first  £3,000,000  loan  the  National  City  Bank  of  New 


VALORIZATION  IN  BRAZIL  235 

York  was  represented  by  Mr.  Herman  Sielcken;  also  that  when 
the  purchase  of  coffee  began  for  the  State  of  Sao  Paulo,  August 
20,  1906,  among  the  large  firms  through  whom  the  purchases 
were  made  was  Grossman  and  Sielcken  of  New  York  City,  a 
partnership  composed  of  George  W.  Grossman  and  Herman 
Sielcken.  The  expenses  of  valorization  came  in  for  a  great  deal 
of  criticism.  The  bonds  for  the  first  £3,000,000  loan  were  to  run 
3,  4,  5,  and  6  years,  and  bear  five  per  cent  interest,  but  yet  they 
were  sold  at  93.  The  discount  amounts  to  $1,016,400.  The  bonds 
were  in  fact  paid  off  within  three  years,  the  interest  thereon 
amounting  to  about  $2,178,000.  In  addition  to  this  the  bankers 
received  1  per  cent  upon  the  face  value  of  the  bonds,  and  also 
one  per  cent  upon  the  interest  paid,  which  amounted  to  about 
$167,000,  and  they  were  also  paid  1}4  per  cent,  or  about  $181,500 
for  stamps,  taxes,  and  other  expenses.  Hence  the  total  cost  of 
this  loan  of  $14,520,000  was  about  $3,542,000,  or  more  than 
24  per  cent. 

The  bonds  for  the  £15,000,000  ($72,600,000)  were  to  run  10 
years  at  five  per  cent  interest,  and  were  sold  at  a  discount  of  15 
per  cent,  which  was  a  loss  to  the  State  of  $10,890,000.  According 
to  the  report  of  the  Sao  Paulo  minister  of  finance,  dated  September 
10,  1910,  these  loans  up  to  that  date  had  already  cost  the  State 
in  expenses  and  charges  of  various  kinds,  in  difference  of  types  of 
various  loans  (discounts),  freights,  insurances,  buying  and  selling 
commissions,  interest  on  advances,  warehousing  charges,  collec- 
tion and  remittance  fees,  and  other  expenses  in  connection  with 
State-owned  coffee  $52,591,976  in  gold.  This  meant  a  cost  of 
33^  cents  a  pound  in  administrative  expenses  for  all  the  coffee 
purchased  by  the  Government.  The  Government  could  much 
more  cheaply  have  paid  a  direct  bounty  to  the  producers  provided 
that  coffee  sank  below  a  reasonable  price. 

The  marketing  of  the  10,000,000  bags  of  coffee  withdrawn 
from  the  market  was  left  to  a  committee  of  the  bankers.  The 
government  of  Sao  Paulo  obligated  itself  to  offer  for  sale  through 
this  committee  at  public  auction  or  by  sealed  proposals,  at  the 
price  of  the  day,  500,000  bags  in  1909;  600,000  bags  in  1910;  700,000 
bags  in  1911;  and  700,000  bags  in  each  succeeding  year.  The 
government  conceded  to  the  committee  full  and  irrevocable  power 
to  determine  the  times  of  sale,  the  minimum  obligatory  quantities 
mentioned,  the  markets  in  which  to  sell,  to  make  the  sales  in  the 
name  of  the  government,  and  exercise  control  over  the  transac- 
tions.    The  Committee  was  to  be  paid  1  per  cent  upon  the  net  ^ 


236  AGRICULTURAL  PRICES  AND  VALORIZATION 

product  of  the  sales.    On  September  30,  1909,  this  committee  had 
in  its  custody  and  stored  in  the  following  amounts  and  places: 

New  York 1,744,161  bags 

Hamburg 1,766,203  " 

Havre 1,583,902  " 

Antwerp 1,080,410  " 

London 197,790  " 

Rotterdam 155,191  " 

Bremen 108,907  " 

Trieste 109,807  " 

Marseilles. 96,781  " 

6,843,152 

To  market  this  coffee  without  disturbing  the  market  was  a 
problem  for  the  Committee.  Since  several  members  of  the  Com- 
mittee were  personally  interested  in  the  coffee  trade,  the  higher 
the  price  of  coffee  the  greater  the  profit  realized  by  them  there- 
from. Minutes  of  the  meetings  of  this  Committee  show  that  they 
were  greatly  perturbed  at  times  as  to  the  marketing  problem.  At 
their  first  meeting,  January  5,  1909,  it  was  determined  that  not 
more  than  500,000  bags  should  be  sold  during  1909,  and  that  at 
not  less  than  7.2  cents  per  pound.  At  the  April  27,  1909,  meeting 
the  Committee  considered  favorably  a  proposal  of  the  government 
that  an  additional  export  duty  be  imposed  on  coffee  of  10  per  cent, 
payable  in  coffee,  such  coffee  to  be  destroyed  under  the  control 
of  the  Committee.  Whether  such  coffee  should  be  burned  or 
dumped  in  the  sea  was  debated.  The  government  later  decided 
to  withdraw  this  proposal.  At  the  January  5,  1911,  meeting  of 
the  Committee  it  was  determined  that  1,200,000  bags  should  be 
sold  between  the  1st  and  30th  of  April,  1911,  and  that  no  more 
should  be  sold  during  the  year.  The  Committee  made  sales 
during  1911  as  follows:  300,000  bags  at  12^  cents;  300,000  bags 
at  12^  cents.  On  January  25,  1912,  the  Committee  announced 
that  400,000  bags  had  been  sold  that  day  in  New  York  at  15  cents 
a  pound.  When  the  World  War  broke  out  there  were  3,000,000 
bags  in  store  in  Europe.  This  was  promptly  seized  by  the  beUiger-  * 
ents.    This  closed  out  the  last  of  the  valorized  coffee. 

The  effects  of  valorization  are  viewed  in  different  lights  by 
different  persons.  Some  claim  it  was  an  economic  and  financial 
success.  The  facts  are  a  little  difficult  to  unravel.  One  unforeseen 
result  was  a  suit  in  equity  brought  by  the  United  States  Govern- 
ment against  Herman  Sielcken  and  the  other  members  of  the 
bankers'  Committee,  praying  that  the  valorization  scheme  with 
its  several  '' conspiracies,  contracts  and  agreements"  be  declared 
violative  of  the  American  Anti-trust  Act,  and  that  any  claims  to 
ownership  of  said  coffee  by  any  member  of  committee  be  declared 


VALORIZATION  IN  BRAZIL  237 

illegal  and  null  and  void;  second,  that  defendant  Herman  Sielcken 

be  perpetually  enjoined  from  further  withholding  from  the  market 

the  coffee  held  by  him  and  stored  in  New  York,  and  that  he  be 

enjoined  from  selling  the  same  on  condition  that  the  purchaser 

will  not  resell  same;  third,  that  defendants  be  enjoined  from  parting 

Avith  the  custody  of  said  coffee  except  to  deliver  same  to  a  receiver 

of  the  court,  to  be  sold  by  him;  fourth,  that  a  receiver  be  appointed 

forthwith  to  take  charge  of  said  coffee.    The  brief,  in  this  same 

lawsuit,  states: 

"The  immediate  effect  of  valorization  was  to  withdraw  from  the  natural 
course  of  commerce  more  than  10,000,000  bags  of  coffee,  and  thus  to  reduce 
the  available  supply  and  to  increase  its  market  price  .  .  .  Shortly  thereafter 
the  prices  began  to  rise  and  continued  to  rise  although  in  the  season  of  1909- 
1910  the  production  exceeded  the  consumption  by  more  than  a  nuUion  bags, 
with  the  result  that  whereas'  when  the  scheme  of  valorization  was  adopted, 
Rio  No.  7  was  selUng  in  New  York  at  about  7]^  cents  per  pound.  It  is  now 
(1912)  seUing  at  14^  cents  per  pound,  an  increase  in  price  of  nearly  100  per 
cent.  Within  the  last  year,  conditions  have  become  especially  acute,  because 
the  consumption  has  exceeded  the  production,  and  hence  the  deficiency  had 
to  be  drawn  from  the  supply  already  on  hand,  whUe  a  very  large  part  of  that 
supply  was  and  is  in  the  hands  of  said  committee,  who  were  careful  to  sell 
therefrom  only  in  such  quantities  and  in  such  a  way  as  not  to  reduce  the  mar- 
ket price.  As  a  matter  of  fact  said  committee  are  masters  of  the  coffee  market. 
They  have  under  their  control  such  a  quantity  of  coffee,  that  by  placing  the 
same  upon  the  market  the  price  of  coffee  would  be  greatly  reduced,  while 
withholding  it  from  the  market  maintains  a  price  which  is  abnormally  high 
.  .  .  The  real  intent  and  purpose  of  the  valorization  scheme  was  through  a 
restraint  of  the  commerce  in  coffee  between  Brazil  and  other  countries,  includ- 
ing the  United  States,  by  monopoHzing  the  same  to  increase  the  price  thereof 
to  the  enrichment  of  those  instigating  the  scheme.  This  fact  is  made  manifest 
by  the  amount  of  money  reahzed  by  individuals  therefrom  and  from  the  ex- 
pense thereof  directly  to  the  State  of  Sao  Paulo,  but  indirectly  to  the  consumers 
of  coffee  .  .  .  These  figures  show  that  it  was  not  for  the  welfare  of  the  pro- 
ducers that  this  valorization  scheme  was  concocted  and  carried  out  ..." 

The  first  aim  of  the  scheme  was  to  raise  the  price  of  coffee  to 
the  producers.  This  was  undoubtedly  accomplished.  However, 
it  is  open  to-  debate  whether  the  increase  in  price  equaled  the 
increase  in  taxes  required  to  finance  the  scheme  and  reward  the 
bankers.  Under  an  agreement  of  August  6,  1906,  the  Sao  Paulo 
government  obUgated  itself  to  create  a  '' surtax ''  of  3  francs,. sub- 
ject to  increase  or  reduction,  upon  each  bag  of  coffee  exported. 
The  law  of  August  25,  1908,  provided  that  an  additional  tax  of 
20  per  cent  ad  valorem  should  be  collected  on  all  coffee  exported 
in  excess  of  9,000,000  bags  for  the  first,  9,500,000  bags  the  second 
year,  and  10,000,000  bags  each  year  thereafter.  The  3  franc  surtax 
above  was  changed  to  5  francs.  In  September,  1908,  the  20  per 
cent  tax, was  made  29  per  cent.  That  this  system  of  taxing  was 
unduly  burdensome  to  the  coffee  trade  was  recognized  by  the  Sao 


238  AGRICULTURAL  PRICES  AND  VALORIZATION 

Paulo  minister  of  finance,  as  evidenced  in  a  communication  of  his 
to  the  BraziUan  embassy  in  Washington  under  date  of  April  1, 
1909,  wherein  he  states: 

"The  taxes  collected  by  the  State  were  given  in  guaranty  of  the  loan  and 
will  be  reduced,  once  the  loan  is  redeemed.  The  tax  of  20  per  cent  ad  valorem 
on  the  export  beyond  the  amount  marked  by  law  (9,000,000,  9,500,000  and 
10,000,000  bags  for  first,  second  and  subsequent  years  respectively)  was 
created  by  exigencv  of  the  bankers,  but  the  Government  is  negotiating  with 
them  to  replace  it  by  another  more  acceptable  to  the  markets." 

The  artificial  enhancement  of  price  of  coffee  and  the  placing 
of  export  duties  on  it  stirred  the  American  Congress.  There  was 
even  some  idea  of  modifying  the  American  policy  of  free  trade 
in  coffee  in  retaliation.  At  this  juncture  the  finance  minister  of 
Sao  Paulo  officially  disclaimed  further  interest  in  the  valorization 
operations.    He  said  (April  1,  1909) : 

"The  Government  of  Sao  Paulo  is  no  longer  engaged  in  any  valorization 
operations  and  has  ceased  entirely  with  its  intervention  in  the  market  with  the 
signing  of  the  15,000,000  pounds  sterling  loan.  All  the  coffee  stock  belonging  to 
the  State  has  been  dehvered  to  the  committee  of  bankers  authorized  to  sell  it." 

There  is  no  doubt  that  the  Brazilian  planter,  being  denied  the 
privilege  of  increasing  his  acreage  of  coffee  cultivated  his  crop  more 
intensively.  The  trees  were  given  better  attention.  Not  only 
that,  but  the  high  prices  stimulated  planters  in  Java  and  elsewhere 
to  increase  their  output.  In  this  manner  valorization  did  lead  to 
over  production.  The  Wall  Street  Journal  of  March  18,  1916, 
comments  as  follows  on  the  low  price  then  prevailing: 

"Coffee  prices  are  low,  inexphcably  low,  to  even  the  best  trained  special- 
ists in  the  world's  leading  markets.  At  about  7^  cents  the  market  hangs  at 
the  mercy  of  liberal  supplies  coming  from  producing  sources  .  .  .  The  price 
depression  is  sufficiently  explained  by  trade  dislocation  and  by  surplus  pro- 
duction, of  which  last  year  the  world  had  1,055,000  bags  left  over  out  of  a 
total  supply  of  19,612,000  bags  .  .  .  Last  year's  big  crop  of  19,612,000 
included  13,816,000  bags  from  Brazil  and  5,796,000  bags  from  all  other  sources, 
including  mild  Central  American  and  East  Indian  coffees.  The  non-Brazilian 
coffees  were  30  per  cent  above  the  average  in  yields,  and  therefore  had  some 
perceptible  effect  in  reducing  the  coffee  prices.  But  Brazil's  65  per  cent  of 
the  world's  production  is  still  the  dominating  influence.  Last  year's  supply 
was  the  largest  since  the  valorization  plan  helped  to  hold  prices  up.  The 
supply  situation  there,  after  several  poor  years  intervening,  is  the  main  reason 
for  low-priced  coffee." 

It  is  quite  generally  held  that  the  cure  for  low  prices  is  low 
prices;  the  cure  for  high  prices  is  high  prices.  But  in  applying  a 
remedy  to  low  prices  in  Sao  Paulo,  the  government  applied  a 
remedy  certain  in  the  end  to  increase  the  disease.  A  temporary 
gain  was  secured  which  was  a  pseudo  gain,  for  the  later  losses  and 
expenses  more  than  offset  the  temporary  gain.    New  competitors 


PRICE  AND  VALUE  239 

were  created  in  producing  coffee.  Doubtless  the  temporary  high 
price  for  coffee  caused  many  consumers  to  seek  substitutes  for 
this  drink,  of  which  there  are  many  on  the  market.  The  valoriza- 
tion scheme  led  to  a  severe  collision  Avith  the  legal  authorities  of 
the  United  States.  Evidently  the  chief  advantage  of  the  scheme 
accrued  to  the  bankers  who  managed  it.  These  bankers  were 
beyond  the  reach  of  our  legal  machinery.  As  Wm.  T.  Chantland, 
Special  Assistant  to  the  United  States  Attorney  General,  says  in 
his  detailed  report  on  valorization: 

"Of  a  violation  of  this  law  (United  States  Anti-trust  Act)  the  members 
of  the  so-called  valorization  Committee,  who  are  among  the  best-posted  coffee 
men  in  the  world,  were  and  are  guilty,  but  of  them  we  can  deal  only  with  the 
American  member,  Mr.  Herman  Sielcken,  who  is  now,  and  has  been  since 
before  this  investigation  was  begun,  Hving  out  of  the  United  States,  to  wit, 
on  his  estates  in  Baden-Baden." 

That  a  state  may  comer  the  market  and  raise  prices  ("valor- 
ize") is  a  doctrine  that  has  a  certain  glamor  about  it  among 
law-makers  in  the  United  States.  As  evidence  of  this,  the  cotton 
situation  in  1917  is  an  example.  Texas  seriously  considered 
valorizing  its  cotton  crop — or  attempting  to  do  it.  The  Houston 
Chronicle  of  February  8,  1917,  contains  this  news  item: 

"  The  house  committee  on  constitutional  amendments  met  last  night  and 
reported  favorably  the  Clark  resolution  for  a  constitutional  amendment 
authorizing  the  Legislature  to  create  a  governmental  agency  with  powers  to 
fix  a  minimum  price  for  cotton  each  year.  The  resolution  also  provides  an 
additional  State  tax  of  10  per  cent  to  raise  a  fund  which  would  enable  the 
State  to  buy  cotton  or  lend  money  on  the  staple  in  order  to  maintain  the  mini- 
mum price  determined  upon." 

Price  and  Value. — Price  is  value  expressed  in  terms  of  money. 
Values  fluctuate  from  two  sets  of  causes,  those  affecting  the  supply 
side  and  those  affecting  the  demand  side.  UtiUtyss  the  power  to 
satisfy  a  want.  Value  does  not  depend  on  utility,  but  on  utility- 
plus-scarcit}^,  or  what  is  generally  called  marginal  utility.  Water 
has  high  utility,  is  in  fact  indispensable  to  life.  Yet  in  most  places 
drinking  water  is  so  plentiful  as  to  be  free — that  is,  has  no  value, 
no  price,  no  marginal  utility.  But  just  to  that  degree  that  the 
want  for  water  is  unsatisfied,  to  that  degree  its  value  increases. 
No  principle  of  economics  has  wider  acceptance  than  this  marginal 
utihty  theory  of  value.  This  being  true,  it  is  obvious  that  value 
does  not  depend  on  cost  of  production.  But  it  is  related  to  it. 
Value  does  not  depend  on  demand,  but  is  related  to  it.  The  true 
conception  of  value  is  that  of  the  keystone  of  an  arch,  the  keystone 
being  labeled  value  or  rjiarginal  utility,  and  one  side  of  the  arch 
being  labeled  ''Supply"  and  the  other  side  ''Demand." 


240 


AGRICULTURAL  PRICES  AND  VALORIZATION 


The  figure  (Fig.  47)  correctly  shows  the  relation  of  value  to  cost 
of  production.  Price  fixed  on  cost  of  production  alone  therefore 
may  work  disaster  by  ignoring  the  demand  side.  When  supply 
and  demand  are  permitted  to  work,  unfettered  by  artificial  influ- 
ences, governmental  or  otherwise,  then  high  prices  are  the  cure 
for  high  prices  (by  affecting  both  the  supply  and  demand  side); 
and  low  prices  are  the  cure  for  low  prices  (by  affecting  both  the 
supply  and  demand  side). 


Vq  I  u  e. 

margin  a  I 

u  +  i  lify 


Supply 


Co  si-    o-P 
j>roduchon 


Demand 


Fia.  47. — Relation  of  value  to  cost  of  production  and  to  demand.  Value  depends  on  mar- 
ginal utility.  Marginal  utility  depends  on  supply  and  demand.  Supply  depends  on  cost 
of  production.  Demand  depends  on  utility.  Any  change,  therefore,  in  supply  or  demand 
affects  value.    Any  change  in  cost  of  production  or  utility  affects  supply  and  demand,  and 

hence  value. 


Conclusions. — ^The  question  of  a  fair  price  is  coming  more  and 
more  to  be  a  social  question.     Among  our  social  forces  to-day 
are  government,  public  opinion,  economic  organizations  of  pro- 
ducers and  consumers,  the  press,  and  so  on.    The  metropolitan 
press  at  present  sheds  more  heat  than  light  on  the  price  question, 
catering  to  the  supposed  wants  of  its  readers.     However,  a  few 
big  city  dailies  now  maintain  a  market  information  service  for  the 
honest  purpose  of  educating  the  consumers  in  the  problems  of. 
markets  and  prices.     Here  is  a  vast  opportimity  for  service  lefl^ 
untouched  by  most  city  papers,  however.    Public  opinion,  unless 
fed  on  the  truth,  is  a  force  for  evil  as  much  as  it  is  a  force  for  good)- 
The  government  may  do  much,  and  in  fact  is  doing  much,  to  spread* ' 


COLLECTIVE  BARGAINING  AS  PRICE  FIXING  241 

information  about ,  markets,  market  practices  and  market  prices. 
It  may  do  much  in  the  way  of  efficient  pubHcity  on  the  important 
steps  in  marketing,  particu  larly  transportation,  grading,  standard- 
ization of  pack,  storage,  processing  and  labeUng,  credit,  and  so  on, 
and  still  leave  free  play  to  individual  initiative  and  industry. 
But  the  heavy,  paralyzing  hand  of  bureaucracy  should  never  be 
permitted  to  displace  the  nice  adjustment  of  economic  forces  seen 
in  the  open  market  where  keen  buyers  meet  keen  sellers  face  to 
face  and  fix  the  market  price  under  free  play  of  supply  and  demand. 
In  the  realm  of  organized  labor  the  collective  bargain  has  now 
established  its  place,  rather  than  government  fixing  of  wages.  It 
is  altogether  probable  and  desirable  that  a  legal  method  of  collec- 
tive bargaining  be  also  worked  out  in  agriculture  in  the  immediate 
future  for  those  more  specialized  products  when  the  plan  promises 
success.  Such  a  collective  bargain,  were  producers,  distributers, 
and  consumers  equally  well  organized  and  represented,  would 
prove  a  useful  adjunct  to  the  open  market  in  establishing  fair  prices. 
Its  educative  value  would  be  great.  Its  economic  value  would  be 
small  at  first,  but  would  doubtless  increase  with  time.  At  any  rate, 
the  growing  demand  by  both  consumer  and  producer  for  "price 
fixing,"  and  that  "something  be  done"  by  "somebody"  requires 
that  the  situation  be  met.  And  the  collective  bargain  method 
would  be  vastly  preferable  to  governmental  price  fixing.  The  farmer 
would  be  given  a  voice  in  price  making,  thus  salving  a  very  sore 
spot.  In  the  language  of  our  political  formula,  the  "consent  of 
the  governed  "  is  basic;  it  is  equally  expedient  in  our  economic  life. 

Collective  Bargaining  as  Price  Fixing. — The  term  collective 
bargaining  is  used  in  agriculture  with  some  vagueness  of  meaning. 
In  mining  and  in  railroading,  whence  the  term  comes,  the  meaning 
is  clear — namely  the  fixing  of  the  wage  rate  (and  other  conditions 
of  employment)  by  a  sort  of  parliament  or  congress  of  representa- 
times  of  labor  and  of  capital.  In  agriculture  the  essence  of  the 
term  is  price  fixing.  Therefore  collective  bargaining  differs  from 
cooperative  buying  and  selling.  Cooperative  selling  means  the 
mere  pooling  of  supplies  and  selling  at  the  market  price  from  day 
to  day.  Collective  bargaining  means  fixing  the  market  price 
usually  for  a  definite  period,  such  as  one  year  or  one  month.  And 
price  fixing  also  implies  control  of  the  supply  by  the  producers 
^^hose  representatives  are  making  the  collective  bargain. 

The  farmer  desires  collective  bargaining,    and  is  entitled  to 
:,  because  of  the  voice  it  gives  him  in  fixing  the  price  on  his 
wn  products. 
16 


242  AGRICULTURAL  PRICES  AND  VALORIZATION 

The  field  now  successfully  covered  by  collective  bargaining  in 
agriculture  is  that  of  whole  milk  for  certain  large  metropolitan 
districts,  particularly  New  York,  Pittsburg,  Cleveland,  Chicago, 
Detroit,  Minneapolis,  St.  Paul,  and  San  Francisco.  Here  the 
dairymen  control  the  raw  milk  supply.  Representatives  of  the 
organized  dairymen  bargain  with  representatives  of  the  organized 
distributors,  and  a  price  is  fiixed.  If  consumers  ever  organize,  the 
farmers  may  bargain  collectively  with  organized  consumers.  At 
present,  the  problem  of  protecting  the  consumer  against  a  ''com- 
bine" of  farmer  and  distributor  is  being  solved  in  different  ways 
in  different  cities.  Evidently  the  consumer  is  entitled  to  a  ''voice" 
in  price  fixing  on  the  produce  he  buys.  In  Detroit,  Pittsburg,  and 
elsewhere,  he  "sits  in"  with  the  representatives  who  do  the 
price  fixing. 

The  chief  problem  involved,  however,  is  not  by  whom  shall 
the  price  be  fixed,  but  at  what  point.  The  farmer  asks  for  "cost 
of  production  plus  a  profit,"  in  other  words,  a  guarantee  of  divi- 
dends. But  he  is  never  able  to  sell  all  his  product  in  this  way  for 
a  very  long  time,  if  he  produces  a  surplus.  As  the  supply  increases 
beyond  the  consumer's  wants,  the  price  must  drop;  conversely, 
when  the  supply  decreases  below  consumer's  wants,  prices  rise. 
Hence  a  sliding  scale  is  the  solution,  representing  both  cost  of 
production  and  demand.  In  other  words,  collective  bargaining 
will  work  if  and  when  it  follows  the  law  of  supply  and  demand. 

QUESTIONS  ON  THE  TEXT 

1.  What  factors  determine  price?    What  factors  should  determine  price? 

2.  Do  agricultural  prices  fluctuate  according  to  the  law  of  supply  and  demand? 

3.  Are  agricultural  prices  higher  in  the  spring  than  in  the  fall? 

4.  Show  the  limitations  of  the  theory  of  supply  and  demand  in  price  fixing. 

5.  Show  the  attitude  of  some  farmers  towards  so-called  "big  business." 

6.  Show  the  farmer's  demands  for  a  "just  price." 

7.  Discuss  the  theory  of  price  fixing  by  the  government,  and  show  its 

limitations. 

8.  Show  relationship  of  "just  price,"  "fair  price,"  and  "equilibrium  price." 

Define  each  term. 

9.  Define  and  illustrate  marginal  producer. 

10.  Show  how  price  fixing  is  sometimes  done  by  collective  bargaining. 

11.  Quote  the  conclusions  of  H.  C.  Taylor  on  the  use  of  price  commissions  in 

price  making. 

12.  Cite  the  experience  of  the  California  Walnut  Growers  in  making  an  "Offer- 

ing Price,"  and  show  what  price  factors  are  given  most  weight. 

13.  Cite  experience  of  Cahfornia  Almond  Growers,  and  show  what  price  factors 

they  take  into  consideration. 

14.  Give  illustration  from  wheat  market  showing  where  demand  may  tempo- 

rarily be  the  dominating  factor  in  price  making. 

15.  Show  Umitations  to  the  theory  of  basing  farm  prices  on  cost  of  production. 


REFERENCES  243 

16.  Give  in  detail  the  experience  of  Brazil  in  valorizing  cofiFee,  and  show  what 

principles  of  price  making  are  here  involved. 

17.  Define  price,  and  distinguish  from  value.    Define  utiHty;  marginal  utiHty. 

18.  Show  relation  of  price  to  cost  of  production;  to  utiHty;  to  demand;  to 

supply;  to  marginal  utility. 

19.  Compare  price  fixing  by  governmental  agencies  and  by  collective  bargain- 

ing.   Which  is  preferable? 

20.  What  are  the  arguments  advanced  by  Swift  and  Company  against  the 

cost-of-production  theory  in  fixing  prices  for  cattle? 

21.  Show  some  of  the  difficulties  met  in  price  control  during  the  war  by 

Germany. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Give  an  account  of  a  case  of  collective  bargaining  in  agriculture  in  your 

State. 

2.  What  is  the  legal  status  of  collective  bargaining?    Give  an  account  of  some 

court  proceedings  wherein  the  legaHty  of  collective  bargaining  in  agri- 
culture has  been  called  in  question. 

3.  To  what  extent  is  it  true  that  manufacturers  fix  the  price  at  which  their 

goods  are  sold? 

4.  What  is  the  truth  of  this  complaint  recently  pubUshed  in  a  farm  paper: 

"The  farmer  is  the  only  person  on  earth  having  no  voice  in  fixing  the 
price  of  his  own  products"? 

5.  To  what  extent  do  laborers  name  their  own  wages? 

REFERENCES 

1.  Pope,  J.  E.:  "Can  the  Farmer  ReaUze  Higher  Prices  for  His  Crops 
by  Holding  Them?"    Qtiarterly  Journal  of  Economics,  Vol.  30,  pp.  805-831. 

2.  Yearbook  of  Agriculture,  "Causes  Affecting  Farm  Values,"  1905,  pp. 
511-533;  also,  "Agricultural  Production  and  Prices,"  1897,  pp.  577-607, 
Washington,  1905  and  1897. 

3.  "Industrial  Commission  Report,"  Vol.  10,  p.  CCLXXXVII;  also  Vol. 
19,  pp.  134-146,  Washington,  1898-1902. 

4.  "Monthly  Crop  Report,"  United  States  Department  of  Agriculture, 
Washington,  February,  1917,  p.  16.  Figures  showing  relation  of  supply  and 
demand  in  price  changes. 

5.  "Digest  of  Report  of  British  Board  of  Trade  on  Cost  of  Living  in  the 
Principal  Industrial  Towns  of  the  United  States" :  "Comparative  Summary  of 
Reports  of  the  British  Board  of  Trade  on  Cost  of  Living  in  the  Principal 
Industrial  Towns  of  England  and  Wales,  Germany,  France,  Belgium,  and  the 
United  States,"  63  Cong.  1  Sess.  Sen.  Doc.  38. 

6.  "Report  of  Cost  of  Living  Commission,"  Wellington,  New  Zealand, 
1912. 

7.  Warren,  G.  F.:  "Some  Purposes  of  Price  Fixing  and  Its  Results," 
American  Economic  Review,  March,  1919,  pp.  237-245. 

8.  Taylor,  H.  C.  :  "  Price  Fixing  and  the  Cost  of  Farm  Products,"  Bulletin 
292,  Agricultural  Experiment  Station,  University  of  Wisconsin,  May,  1918. 
A  practical  and  comprehensive  treatment  of  the  whole  subject. 

9.  "Are  Prices  too  High?"  Editorial  in  Wallace's  Farmer,  May  25,  1917, 
p.  836. 

10.  Bradford,  Edward  A.:  "The  Question  of  Price  Regulation."  The 
Annalist,  June  11,  1917,  p.  787. 

11.  McBride,  James  N.:  "New  School  of  Agricultural  Thought."  The 
Annalist,  June  25,  1917,  p.  848.  An  argument  for  price  fixing^on  agricultural 
products  by  the  farmer. 


244  AGRICULTURAL  PRICES  AND  VALORIZATION 

12.  "Monthly  Review  of  the  United  States  Bureau  of  Labor  Statistics," 
Washington,  May,  1917.  Contains  articles  on  government  control  of  food 
supplies  in  Germany  and  government  control  of  food  supplies  in  Italy. 

13.  Rogers,  F.  E.:  "Wholesale  Prices  and  Receipts  of  Apples  in  Boston 
for  36  years,"  Cornell  Extension  Bulletin  28,  April,  1918,  Ithaca,  N.  Y. 

14.  Mitchell,  Wesley  C.  :  "  History  of  Prices  During  the  War — Inter- 
national Price  Comparisons,"  Price  Bulletin  No.  2,  War  Industries  Board, 
Washington,  1919. 

15.  "Some  Unforeseen  Results  of  Coffee  Valorisation,"  Review  of  Reviews, 
New  York,  January,  1914,  p.  111. 

16.  "Truth  About  Coffee,"  Wall  Street  Journal,  March  18,  1916. 

17.  Chantland,  Wm.  T.:  "Valorization  of  Coffee — a  Detailed  Report  of 
the  Transactions  and  Facts  Relating  to  the  Valorization  of  Coffee,"  63  Cong. 
1  Sess.  Sen.  Doc.  30. 

18.  Brief:  "In  the  District  Court  of  the  United  States  for  the  Southern 
District  of  New  York.  United  States  of  America,  Petitioner,  versus  Herman 
Sielcken  et  al,  Defendants,"  Washington,  1912. 

19.  Daily  Consular  and  Trade  Reports,  Washington,  as  follows:  Jan.  28, 
1908;  Oct.  1, 1908;  Oct.  19, 1908;  Aug.  13, 1909;  Nov.  2, 1909;  Feb.  16, 1911 ;  Feb. 
7, 1916;  July  12,  1916;  Supplement  for  Aug.  20,  1916.    (Valorization  of  coffee.) 

20.  "Monthly  Consular  and  Trade  Report,"  March,  1907. 

21.  Warren,  G.  F.:  "Why  Prices  are  High;  Causes  of  High  Price  Levels: 
Probable  Future  Prices,"  Grain  Growers'  Guide  (Winnipeg),  Feb.  4,  1920. 

22.  Rogers,  Thorold:   "History  of  Agricultural  Prices  in  England." 

APPENDIX 

From  an  advertisement  of  Swift  and  Company,  published  in  the  press  of 
the  United  States,  August,  1918. 

Why  the  Cost  of  Producing  Cattle  Does  not  Determine  Their  Selling  Price. 

To  produce  a  steer  for  meat  purposes  Not  only  do  the  receipts  of  animals  vary 

requires,  as  you  know,  a  period  of  from  one         from  week  to  week  but  the  consumer  de- 
to  three  years.  mand  for  meat  also  fluctuates. 

The  prices  the  producer  has  to  pay  for  „„    J^LtZ  T.Vi^L^  Z'^ZlTf^^^^^"" 

feed,    labor    and    other   items    during   this  ^Li.ilc      u   -fTK^^LtL'^  +!«!.. .T,f^ 

period,  together  with  weather  conditions.  S^"*  '  ^  i  Jt^  ^r.==L^^2af  "L  kI    *°^*    t" 

J  . '• „,u„+  :a  „^o+„  i„  .^^^^„ *i „+ hve  stock  into  dressed  meat  and  by-products 

determme  what  it  costs  to  produce  the  steer.  ^^^  distribute  them  to  the  consumer  under 

But  the  price  the  producer  receives  for         ^^^^''"^  "^  *'^'^  ^^^• 
the  steer  depends  on  conditions  existing  at  Market    conditions    and    competition 

the  time  it  is  sent  to  market.  establish  the  prices  the  producer  gets  for 

his   cattle.      When   meat   prices   go   up    or 

If  the  supply  of  cattle  coming  on  the         down,  so  do  cattle  prices, 
market  at  this  time  is  greater  than  the^c^^^  ^j^  j^^^         ,^  ^^^  ^^^^ 

^^^I^^^^^^tTi^^.^^Vr^J^•         ^  for  animals  than  he  takes  in  from  the  sale  of 

of  meat  and  live  stock  go  down.  ^^^^  ^^^  by-products. 

On  the  other  hand,  if  the  number  of  Swift  &  Company  will  gladly  cooperate 

cattle  coming  to  market  is  less  than  enough  in  the  carrying  out  of  any  national  policy 

to  supply  the  consumer  demand  for  meat,  that  will  tend  to  steady  the  prices  of  live 

the  prices  of  meat  and  live  stock  go  up.  stock  and  meat. 

Government  Control  of  Food  Supplies  in  Germany  During  the  Early 
Years  of  the  World  War. — Shortly  after  the  War  was  declared  the  German 
Government  appointed  a  commission  of  scientists  to  prepare  a  report  upon 
which  to  base  defensive  food  measures.  This  Commission,  commonly  called 
the  Eltzbacher  Commission,  devoted  several  months  to  the  study  of  the 
production,  distribution,  and  consumption  of  food. 


APPENDIX  245 

An  account  of  the  German  experience,  from  which  the  following  excerpts 
are  taken,  is  printed  in  the  Monthly  Review  of  the  Bureau  of  Labor  Statistics, 
Washington,  May,  1917.i'- 

"The  recommendations  of  the  Eltzbacher  Commission  for  the  reduction  of  swine  and 
cattle  were  carried  out  during  the  first  four  months  of  1915.  Approximately  one-third  of  the 
swine  and  10  per  cent  of  the  milch  cows — supposedly  about  a  million  and  a  half — were  killed. 
About  the  time  when  the  killing  of  the  swine  was  under  way,  in  March,  an  inventory  of  the 
potato  stocks  led  to  the  official  statement  that  these  were  low.  Since  the  potato  in  Germany 
was  one  of  the  staple  swine  feeds,  it  was  decided  to  kill  rather  more  than  the  denominated 
number  of  swine  in  order  to  meet  the  loss  in  potatoes.  Two  months  later  another  potato 
inventory  was  taken,  revealing  the  fact  that  the  previous  inventory  had  been  in  error  and 
that  the  killing  of  the  additional  swine  had  been  entirely  unnecessary,  since  the  potatoes 
were  available;  and  these  potatoes  were  thrown  upon  the  market  at  a  huge  loss  in  price  and 
to  a  large  extent  underwent  decomposition. 

"  No  oxen  were  killed,  and  the  killing  of  calves  was  not  in  excess  of  the  usual  number; 
the  slaughter  did  not  extend  to  sheep  and  goats,  which,  on  the  contrary,  were  conserved 
with  foresight.  The  presence  of  such  huge  amounts  of  meat  upon  the  market  unquestionably 
resulted  in  increased  consumption  during  the  first  six  months  of  1915.  According  to  the 
plan,  by  far  the  largest  portion  of  the  meats  thus  obtained  was  to  be  conserved  for  future 
use,  and  should  have  represented  a  very  large  stock  of  conserved  meat.  The  processes  of 
conservation  were,  however,  carried  out  very  inefficiently,  with  the  result  that  a  large 
portion  of  this  meat  underwent  decomposition  and  became  a  complete  loss  ... 

"  In  the  autumn  of  1915,  within  six  months  after  one-third  of  the  swine  and  a  million 
and  a  quarter  of  milch  cows  had  been  killed,  two  meatless  days  (Tuesday  and  Friday)  and 
two  fatless  days  (Monday  and  Thursday)  were  introduced  by  decree.  Maximum  prices 
were  decreed  for  retail  sales,  but  without  correlation  and  usually  without  result. 

"  Gradually^  the  Unes  became  drawn  between  cities  and  industrial  districts,  on  the 
one  hand,  and  the  country  districts,  on  the  other.  To  protect  themselves  the  country 
districts  prohibited  export.  The  authorities  attempted,  in  a  half-hearted  manner,  to  oppose 
such  regulations  and  to  reestablish  the  flow  of  foodstuffs  in  the  channels  of  trade  by  increas- 
ing the  maximum  prices.  A  maximum  price,  once  established,  became,  of  course,  the  only 
price.  As  opposed  to  the  regulations  of  the  cities  and  of  the  imperial  authorities,  the  regula- 
tions of  the  smaller  districts  were  naturally  more  effective.  Restrictive  regulations  spread 
over  the  entire  land,  each  community  looking  out  for  its  own  interests,  and  it  was  soon 
apparent  that  the  industrial  cities  were  at  a  disadvantage. 

Establishment  of  the  "War  Nutrition  OflBce. — "Control  over  the  food  supply  of  the 
Empire  was,  up  to  June,  1916,  vested  in  the  imperial  department  of  the  interior  (Reichsamt 
des  Innern),  of  which  von  Delbriick  was  secretary.  Dissatisfaction  with  the  measures  taken 
by  this  department  became  general  during  the  second  year  of  the  war. 

"The  worst  mistake  of  the  Delbriick  regime  was  in  trying  to  regulate  the  sale  and 
use  of  food  without  knowing  how  much  food  existed.  The  food-card  system  in  particular 
evoked  the  severest  criticism,  this  criticism  being  caused  not  so  much  by  the  rationing  of 
food  as  by  the  long  waiting  in  front  of  shops  for  the  sale  of  foodstuffs.  The  food-cards,  with 
the  exception  of  the  bread  cards,  did  not  carry  any  guarantee,  but  merely  gave  the  holder 
the  right  to  stand  in  line  for  hours  and  take  the  chances.  When  the  supply  for  the  day  was 
exhausted  the  remaining  shoppers  were  turned  away.  Disturbances  of  the  peace  were 
frequent,  and  it  was  felt  as  a  grievous  injustice  that  by  this  waiting  in  front  of  shops  the 
women  were  withheld  from  household  duties  for  hours. 

"When  Delbriick  resigned,  a  separate  department  called  the  war  nutrition  office  was 
created  directly  under  the  Chancellor.  The  president  of  this  office  was  given  absolute  police 
powers  under  martial  law,  with  a  standing  committee  of  experts  representing  the  producers, 
transporters,  middlemen,  consumers,  and  the  army.  The  new  system  was  installed  on 
June  1,  1916,  with  Adolph  von  Batocki  as  president  of  the  war  nutrition  office  .   .  ." 

Control  of  the  Potato  Crop. — "Late  in  January,  1916,  scarcity  of  potatoes  developed 
in  the  cities.  An  inventory  showed  that  only  18,000,000  tons  remained,  from  which  the 
seed  had  still  to  be  reserved,  leaving  only  11,000,000  tons  to  last  for  six  months.  Thereupon 
potato  cards  were  introduced,  and  the  attempt  was  made  to  limit  the  feeding  of  potatoes 
to  live  stock.  When  the  authorities  attempted  to  uncover  and  seize  the  stock  of  stored 
potatoes  unexpected  losses  bj'  decomposition  became  apparent.  Von  Batocki,  on  assuming 
office,  June,  1916,  promptly  prohibited  any  feeding  of  potatoes  to  live  stock.  The  potato 
cards  introduced  earlier  in  the  year  were  not  guaranteed,  and  in  the  large  cities  the  intake 
for  each  person  during  the  spring  months  was  often  as  low  as  a  quarter  of  a  pound  a  day. 
Then  the  crop  of  summer  potatoes  came  upon  the  market  with  a  rush,  as  the  maximum 
prices  were  high  and  scaled  downward  to  increase  the  offerings.  Early  in  August  the  cities 
were  flooded  with  potatoes  in  carload  lots.  The  poor,  however,  because  of  the  announce- 
ment that  prices  were  scaled  to  fall,  bought  only  from  hand  to  mouth.  As  a  result  thousands 
of  tons  decomposed  and  were  lost.  Nevertheless,  even  at  this  time  the  potato  card  and  the 
prohibition  of  feeding  to  swine  were  not  suspended.  Two  weeks  later  the  cities  were  again 
empty  of  potatoes.     The  growers  had  ceased  to  harvest  potatoes  when  the  prices  fell;  they 

^2  United  States  Department  of  Labor,  Monthly  Review  of  the  United  States 
Bureau  of  Labor  Statistics,  Vol.  IV,  No.  5,  May,  1917,  pp.  710,  711,  712,  716, 
717,  718.  ■ 


246 


AGRICULTURAL  PRICES  AND  VALORIZATION 


were  engaged  in  the  harvesting  of  grain,  and  the  urban  populations  had  to  wait  for  regular 
rations  of  potatoes  until  the  digging  of  potatoes  could  again  be  resumed  ..." 

Measures  Relating  to  the  Production  and  Sale  of  Vegetables  and  Fruit. — "The 
retail  prices  for  fruit  reached  unheard-of  heights  during  the  summer  of  1916.  The  growers' 
prices  were  high,  in  extenuation  of  which  the  high  cost  of  fertilizers,  cultivation,  picking, 
and  packing  was  adduced.  The  maximum  prices  first  set  were  low.  Then  the  growers 
refused  to  pick.  The  prices  were  raised,  and  thereupon  green  fruit  was  sent  to  the  market. 
The  people  were  encouraged  to  put  up  fruit  by  sterilization  by  heat  and  with  saccharine; 
but  the  housewives  were  not  inclined  to  experimentation.  Thereupon  the  war  nutrition 
office  confiscated  the  entire  crop  of  early  apples  and  plums,  supplied  the  sugar,  and  had 
them  converted  into  jam." 

Example  of  Agricultural  Advertising  to  Create  Demand  and  Increase 
Constmiption. — (Printed  in  American  Newspapers,  fourth  week  in  July,  1919. 
Republished  by  the  American  Meat  Packers'  Association.  Reprinted  from 
New  York  Tnbune,  July,  23,  1919.) 

"  There  is  Now  Plenty  of  Beef  and  Lamb  for  Everybody. — At  the  present  price  levels 
these  are  the  cheapest  of  the  meat  foods.  It  is  now  possible  to  advise  the  American  people 
that  it  is  no  longer  necessary  to  conserve  beef  and  lamb.  Right  now,  there  is  plenty  of  these 
meats  for  everybody  and  this  will  be  the  situation  for  many  months  to  come.  Here  are 
the  reasons: 

"1.  Demobilization  of  our  armies  has  gone  ahead  so  rapidly  that  they  now  require 
very  little  beef  and  lamb. 

"2.  England  and  the  other  European  countries  no  longer  look  to  us  for  their 
beef  supplies. 

"3.  When  war  was  declared  the  American  live  stock  raiser  started  to  produce  more 
meat.     The  result  has  been  a  large  increase  in  live  stock  production. 

"  Therefore,  you  may  now  buy  beef  and  lamb — and  buy  freely. 


American  National  Live  stock  Association. 
National  Wool  Growers'  Association. 
Cattle  Raisers'  Association  of  Texas. 
Corn  Belt  Meat  Producers'  Association  of 

Iowa. 
Kansas  Live  stock  Association. 
Southern  Cattlemen's  Association. 
Panhandle   and    Southwestern   Stockmen's 

Association. 
Nebraska  Stock  Growers'  Association. 
Missouri  Live  stock  Feeders'  Association. 


Illinois  Live  stock  Association. 
Indiana  Cattle  Feeders'  Association. 
West  Virginia  Live  stock  Association. 
Wyoming  Stock  Growers'  Association. 
Montana  Stock  Growers'  Association. 
California  Cattlemen's  Association. 
Colorado  Live  stock  Association. 
Idaho  Cattle  Growers'  Association. 
Arizona  Cattle  Growers'  Association. 
New  Mexico  Cattle  Growers'  Association, 
Cattle  Raisers'  Association  of  Oregon." 


Extreme  Prices  of  Wheat,  Com  and  Oats. — The  following  table  is  a 
statement  of  the  extreme  prices  in  Chicago  of  Contract  Wheat  (spot)  each 
year  for  the  period  of  fifty-two  years,  indicating  the  month  in  which  such 
prices  were  obtained. 

Wheat 


Year 


Months  the  lowest  prices  were 
reached 


Range  for  the 
entire  year 


Months  the  highest 
prices  were  reached 


1867 
1868 
1869 
1870 
1871 
1872 
1873 
1874 
1875 
1876 
1877 
1878 
1879 
1880 
1881 
1882 
1883 
1884 
1885 


August.  .  . 
November 
December. 

April 

August.  .  . 
November 
September 
October.  . 
February . 

July 

August.  . . 
October. . . 
January.  . 
August.  .  . 
January. . 
December. 
October.  . 
December. 
March. . . . 


$1.55 

imy: 

.76K  @ 
.73X  @ 
.99H  @ 

1.01  @ 
.89  @ 
.81 K  @ 
.83  K  @ 
.83       @ 

I.OIH  @ 
.77  @ 
.815^  @ 
.86H  @ 
.95  H  @ 
mVs  @ 
.90       @ 


@$2 

@    2 

@    1 

@    1 

@    1 

@    1 

@    1 

1 

1. 

1 

1 

1. 

1 

1 

1, 

1 

1 


.73?^ 


85 

20 
.47 
.31 M 
.32 
.61 
.46 
.28 
.30K 
.26K 
.76M 
.14 
.33K 
.32 
A3H 
.40 
.13K 
.96 
.91H 


May. 

July. 

August. 

July. 

Feb.,  April  and  Sept. 

August. 

July. 

April. 

August. 

December. 

May. 

April. 

December. 

January. 

October. 

April  and  May. 

June. 

February. 

April. 


APPENDIX 

Wheat — Continued 


247 


Months  the  lowest  prices  were 
reached 


October 

August 

April 

June 

February 

July 

October 

July 

July 

January 

August 

April 

October 

December 

January 

July 

October 

March 

January 

August 

August  and  Sept 

January 

July 

August 

November 

April 

Nov.  and  Dec 

October 

July 

August 

June 

February 

Jan.,  Feb.,  Mar.,  Apr.,  May 


Range  for  the 

Months  the  highest 

entire  year 

prices  were  reached 

.0.69  3^  @  $0.84K 

January. 

.66  Vs  @ 

.94K 

June. 

.71  M  @ 

2.00 

September. 
February. 

.75M  @ 

1.08^ 

.74K  @ 

1.08X 

August. 

mH  @ 

1.16 

April. 

.69K  @ 

.91K 

February. 

.  54X  @ 

.85 

April. 

.50^  @ 

.63K 

April. 
May. 

ASVs® 

.81K 

.53       @ 

.94^ 

November. 

.66^^  @ 

1.06 

December. 

.62       @ 

1.85 

May. 

.64       @ 

.79>^ 

May. 

.61K  @ 

.87K 

June. 

.63H  @ 

.79M 

December. 

.67K  @ 

.95 

September. 

.lO'A  @ 

.93 

September. 

.81><  @ 

1.22 

Sept.,  Oct.  and  Dec. 
February. 

1.24 

69  3^  @ 

.94K 

May. 

.71       @ 

1.22 

October. 

.84  K  @ 

1.11 

May. 

.99X  @ 

1.60 

June. 

.89  K  @ 

1.29K 

July. 

.83 >^  @ 

1.17 

October. 

.85       @ 

1.22 

April  and  May. 

.mH  @ 

1.15^ 

January. 

.77K  @ 

1.33 

September. 
February. 

.98       @ 

1.68 

.98X  @ 

2.02 

October. 

1.51K  @ 

3.45 

May. 

2.08       @ 

2.42 

December. 

Corn 


Months  the  lowest  prices  were 
reached 


Range  for  the 

entire  year 

$0.56K  @$1.12 

.52       @ 

1.02  K 

.44       @ 

.97  K 

.45       @ 

.94  H 

.39K  @ 

.56  K 

.29M  @ 

.48  5^ 

.27       @ 

.54K 

.49       @ 

.86 

.45K  @ 

.76K 

.38^  @ 

.49 

.37  5^  @ 

.58 

.29  >g  @ 

.43^ 

.29  5^  @ 

.49 

31 M  @ 

.43  K 

.35K  @ 

.76  H 

.79><  @ 

.81 K 

.46       @ 

.70 

.34  K  @ 

.87 

.34  K  @ 

.49 

.331^  @ 

.45 

.33       @ 

.51  H 

.33^  @ 

.60 

.29 K  @ 

.60 

.27K  @ 

.54  K 

.39  J^  @ 

.80 

..37  M  @ 

1.00 

.34  H  @ 

.44^ 

Months  the  highest 
prices  were  reached 


March 

December. 
January. . 
December, 
December, 
October. . . 

June 

January. . 
December, 
February . 

March 

December 
January.  . 

April 

February . 
December 
October. . , 
December 
January. . 
October. . , 
February . 
December 
December 
February . 
December 
January.  . 
December 


October. 

August. 

August. 

May. 

March  and  May. 

May. 

December. 

September, 

May  and  July. 

May. 

April. 

March. 

October. 

November. 

October. 

July. 

January. 

September. 

April  and  May. 

July. 

December. 

May. 

November. 

November. 

November. 

May. 

May. 


248  AGRICULTURAL  PRICES  AND  VALORIZATION 

Com — Continued 


Year 


1894 
1895 
1896 
1897 
1898 
1899 
1900 
1901 
1902 
1903 
1904 
1905 
1906 
1907 
1908 
1909 
1910 
1911 
1912 
1913 
1914 
1915 
1916 
1917 
19181 


Months  the  lowest  prices  were 
reached 


February 

December 

September 

January  and  February. 

January 

December 

January 

Januarv 

December 

December 

January 

January  and  December 
February  and  March.  . 

January 

February 

January 

December 

Jan.,  Feb.,  March 

December 

January 

January 

October 

May 

January 

November 


Range  for  the 
entire  year 


$0.33^ 
.24  3^ 
.19K 
.21H 
.26 
.30 
.30K 
.36 
.43K 
.41 
A2H 
.42 
.39 
.39K 
.56M 
.58K 
.45K 
.45K 
.47  H 
.46M 
.60 

MH 

.69 
.93K 
1.30 


$0.59K 
.54  K 
.30  5^ 
.32  H 
.38 

.38:^ 

.49  K 

.66^ 

.88 

.53 

.58}^ 

.64  K 

.54  K 

.66M 

.82 

.77 

.68 

.76 

.83 

.78>< 

.86 

.82K 
1.11 
2.36 
1.85 


Months  the  highest 
prices  were  reached 


August. 

May. 

April. 

August. 

December. 

January. 

November. 

December. 

July. 

July  and  August. 

November. 

May. 

June. 

October. 

May  and  Sept. 

June. 

January. 

November. 

August. 

Aug.  and  Sept. 

August. 

August. 

October. 

August. 

January. 


1,  No.  2  white  sold  at  $2.03. 


Oats 


Year 


Months  the  lowest  prices  were 
reached 


Range  for  the 
entire  year 


Months  the  highest 
prices  were  reached 


1867 
1868 
1869 
1870 
1871 
1872 
1873 
1874 
1875 
1876 
1877 
1878 
1879 
1880 
1881 
1882 
1883 
1884 
1885 
1886 
1887 
1888 
1889 
1890 
1891 
1892 
1893 
1894 
1895 
1896 
1897 
1898 
1899 
1900 


August 

October 

October 

September 

August 

October  and  November 

April 

August 

December 

July 

August 

October 

January 

August 

February 

September 

September 

December 

September 

October 

March  and  April 

September 

October 

February 

October 

January 

July 

January 

December 

September 

February 

August  and  September. 

August 

August 


$0, 


38  M 
.41M 
.35K 
.32M 
.27 
.20  K' 
.23K 
.37X 
.29K 
.27 
.22 
.18 
.19M 
.22  K 
.29M 
.30M 
.25 
.23 
.24  K 
.22  7^ 
.23M 
.23  J^ 
.17K 
.19K 
.26 
.28 
.21^8 
.26 
.16  H 
.14K 
.15  5^ 
.20K 
.19X 
.21 


$0.90 
.74 
.71 
.53K 

.51M 

.43K 

.40^ 

.71 

.64  K 

.35 

.45^" 

.72K 

.36K 

.35 

AlH 

.62 

.43  K 

.34  K 

mVz 

.35 

.31M 

.38 

.26^ 

.45 

.56  K 

.34^ 

.32>< 

.50 

.31K 

.20>i 

.23  J^ 

.32 

.28K 

.26K 


June. 

May. 

July. 

May. 

March  and  April. 

June. 

December. 

July. 

May. 

September. 

May. 

July. 

December. 

January  and  May. 

October. 

July. 

March. 

April. 

April. 

January. 

December. 

May. 

February. 

November. 

April. 

August. 

May. 

June. 

June. 

Feb.  and  March. 

December. 

May. 

February. 

June. 


APPENDIX 

Oats — Continued 


249 


Year 

1901 
1902 
1903 
1904 
1905 
1906 
1907 
1908 
1909 
1910 
1911 
1912 
1913 
1914 
1915 
1916 
1917 
1918 


Months  the  lowest  prices  were 
reached 


January 

November 

March 

October  and  December 

September 

March 

January 

August 

August 

October 

March 

November 

March 

August 

October 

June 

August 

October 


Range  for  the 
entire  year 


$0.23  K 
.29  M 
.31K 
.28  K 
.25 
.28  Vs 
.33K 
.46 
.36H 
.29K 
.28  K 
.30M 
.31^ 
.33  K 
.35^ 

.51 


$0A8J4 
.71 
.45 
.46 
.34  H 
A2H 
.56  K 
.60  H 
.62K 
.49 
AlVs 
.58  M 
.43  3^ 
.51  H 
.60  H 
.57 
.85 
.93 


Months  the  highest 
prices  were  reached 


December. 

July. 

July. 

February. 

July. 

June. 

September. 

July. 

May. 

February. 

November. 

April. 

September. 

September. 

March. 

November. 

July. 

February. 


CHAPTER  XVI 
COST  OF  PRODUCTION  AND  FARM  ACCOUNTING 

In  manufacturing,  cost  of  production  is  one  of  the  factors 
claiming  the  consideration  of  the  manager.  In  this  field,  certain 
standardized  units  of  costs  have  been  worked  out,  and  cost  account- 
ing systems  fairly  well  developed.  An  era  of  ''scientific  manage- 
ment" has  been  introduced.  But  in  the  field  of  agriculture  rare 
indeed  has  been  the  farmer  who  kept  any  cost  accounts  or  had  any 
definite  idea  of  the  cost  of  producing  his  crops.  In  the  language 
of  political  economy  the  farmer  is  the  manager  or  organizer  in 
charge  of  the  three  factors  of  production — lanci,  labor,  and  capital. 
He  seeks  that  particular  organization  of  the  three  factors  that  will 
give  him  the  highest  net  return.  Considering  the  possible  com- 
bination of  land,  labor,  and  capital  that  can  be  made  by  a  farmer, 
ranging  all  the  way  from  an  intensive  agriculture  to  an  extensive 
agriculture,  it  is  obvious  that  knowledge  of  cost  of  production  is  a 
very  vital  factor  in  success.  This  is  illustrated  by  the  introduction 
of  the  Babcock  milk  test  some  years  ago,  which  made  possible  a 
cost  accounting  against  each  dairy  cow.  The  simple  apparatus 
enabled  many  a  farmer  to  weed  out  of  his  herd  cows  wlidch  were 
not  earning  their  board,  although  they  were  giving  a  large  quantity 
of  milk.  This  is  a  hint,  at  least,  that  some  system  of  cost  accounting 
is  needed  to  apply  to  the  various  factors  of  production.  It  is  per- 
haps correct  to  say  that  there  are  now  four  factors  of  production 
— land,  labor,  capital  and  management  or  organizing  ability. 

The  Federal  Department  of  Agriculture  and  the  State  Experi- 
ment Stations  have  in  recent  years  done  a  great  deal  in  meeting 
the  need  for  information  on  the  cost  of 'producing  crops,  and  in 
devising  workable  schemes  of  cost  accounting  for  farmers. 

The  most  noteworthy  study  in  costs  of  producing  crops  was 
that  undertaken  jointly  by  the  Federal  Department  of  Agriculture 
and  the  Agricultural  Experiment  Station  of  Minnesota.  This 
study  began  in  1902,  the  aim  being  to  continue  it  over  five  cycles 
to  four  years  each.^     This  continuous  detailed  study  of  actual 

1  The  Cost  of  Farm  Products:  Hays,  W.  M.,  and  Parker,  E.  C,  United 
States  Department  of  Agriculture,  Bureau  of  Statistics,  Bui.  48,  and  Minne- 
sota Experiment  Station,  Bui.  97,  1906. 

The  Cost  of  Producing  Minnesota  Farm  Products:  Cooper,  Thomas  and 
Parker,  E.  C,  United  States  Department  of  Agriculture,  Bureau  of  Statistics, 
Bui.  73,  and  Minnesota  Experiment  Station,  Bui.  117,  1910. 

The  Cost  of  Minnesota  Dairy  Products :  Cooper,  Thomas,  United  States 
250 


THE  ACRE  IS  CONSIDERED  THE  BASIS  251 

farms  has  incidentally  afforded  valuable  information  on  systems 
of  farm  management,  types  of  farming  and  labor  requirements. 
Bulletin  117  of  the  Minnesota  Experiment  Station,  in  this  series, 
gave  data  on  farm  labor,  horse  labor,  and  depreciation  of  farm 
machinery.  This  bulletin  served  a  very  useful  purpose  in  defining 
the  problems  involved  in  such  cost  investigations,  and  in  estab- 
lishing certain  standardized  units  in  cost  analysis.  In  the  same 
series,  bulletin  157  shows  the  actual  labor  requirements  of  farm 
crops  in  terms  of  man-  and  horse-hours  per  acre  and  defined  some 
of  the  principles  underlying  the  use  of  man  labor  on  the  farm. 
Since  the  cost  of  man-  and  horse-labor  bears  a  fairly  constant  rela- 
tion to  total  cost  of  crop-production,  man-hour  and  horse-hour 
labor  form  units  of  cost  which  can  safely  be  used  in  different  places 
and  in  different  times,  and  yet  remain  comparable.  These  units 
can  easily  be  translated  into  dollars  and  cents. 

Five  Items. — In  addition  to  the  labor  costs  of  crop  production, 
five  items  of  expense  are  usually  considered,  namely:  (1)  cost  of 
seed,  (2)  cash  cost  of  threshing,  (3)  interest  and  depreciation  on 
machinery  and  special  cash  operating  expense,  (4)  land  rental  or 
interest  on  investment  in  land,  and  (5)  taxes.  When  rent  is 
omitted,  labor  constitutes  more  than  half  the  cost  of  producing 
farm  crops.  And,  to  quote  Minnesota  bulletin  157,  ''Cheap  labor 
is  not  desired  in  the  sense  that  low  wages  indicate  an  opportunity 
to  lower  cost  of  production.  Such  labor  is  often  very  expensive. 
The  use  of  well  paid  labor  on  highly  productive  enterprises  over 
an  extended  period  of  time  makes  for  a  far  more  prosperous 
industry  than  cheap  labor." 

The  acre  is  considered  the  basis  or  standard  unit,  and  not  the 
yield,  in  studying  labor  requirements.  The  yield  may  be  easily 
introduced  and  the  acre-unit  translated  into  a  bushel-unit  for 
purposes  of  comparison.  Man-hour  means  the  labor  of  one  man 
for  one  hour.  Horse-hoiu-  means  the  labor  of  one  horse  for  one 
hour.  Land  rental  is  considered  an  item  of  cost  because  the  value 
of  the  farm  if  invested  in  ordinary  securities  would  yield  an  income. 
In  some  sections,  such  as  North  Dakota,  this  yield  is  reckoned  at 
6  per  cent.    In  Wisconsin  land  rental,  including  taxes,  is  charged 

Department  of  Agriculture,  Bureau  of  Statistics,  Bui.  88,  and  Minnesota 
Experiment  Station  Bui.  124,  1911. 

The  Cost  of  Producing  Minnesota  Farm  Products:  Peck,  F.  W.,  Minne- 
sota Experiment  Station  Bui.  145,  1915. 

Labor  Requirements  of  Crop  Production:  Cooper,  Thomas,  Peck,  F.  W. 
and  Boss,  Andrew,  Minnesota  Experiment  Station,  Bui.  157,  1916. 

The  Cost  of  Producing  Minnesota  Field  Crops,  1913-1917:  Peck,  F.  W., 
Minnesota  Experiment  Station,  Bui.  179,  1918. 


252       COST  OF  PRODUCTION  AND  FARM  ACCOUNTING 


at  5  per  cent.  Some  Experiment  Stations  give  the  item  of  rent  to 
correspond  as  nearly  as  possible  to  actual  cash  rent  paid  by  tenants. 
Cost  of  Growing  Grains. — Wisconsin  Experiment  Station  at 
Madison  carries  on  cost  accounting  work.  Figures  in  that  State 
in  the  year  1917,  based  on  a  six-years  study,  give  the  following 
data  on  cost  of  growing  grains: 


Crop 


Number 
of  fields 


Average 

cost  per 

acre 


Average 
yield 


Rental 


Oats.. 
Barley 
Rye.  . 
Wheat 


13.35 
13.38 
11.22 
12.10 


35.7 
22.2 
16.2 
17.0 


4.70 
3.98 
8.94 
8.48 


Other  Cost  Accounting. — These  costs  are  seen  to  run  very  close 
to  the  Iowa  costs,  found  in  Appendix  to  this  chapter. 

Referring  again  to  the  Minnesota  studies  (1908  to  1912,  bulle- 
tin 145),  we  find  the  following  summary  of  costs: 

Average  monthly  cash  wages  paid  farm  laborers  during  the 
8  crop  season  months,  April  to  November, 

Rice  County $28.19 

Lyon  County 26.45 

Norman  County 28.86 

During  the  4  winter  months,  these  counties  ran  as  follows,  respec- 
tively, $17.85;  $21.20;  $17.27. 

The  average  monthly  cost  of  board  per  man,  same  years,  same 
counties,  was  $15.43;  $14,17;  $12.36. 

Reduced  to  an  hour  basis,  the  average  rate  of  wages  per  hour 
for  monthly  man-labor,  same  years,  same  counties,  was  14.9  cents; 
13.9  cents;  13.5  cents. 

The  average  annual  cost  of  maintaining  a  horse,  same  years, 
same  counties,  was  respectively,  $103.41;  $99.67;  $84.16.  The 
hours  worked  annually  by  a  horse  averaged  1038;  1106;  976;  or, 
on  a  daily  basis,  the  average  hours  worked  by  a  horse  was,  3.46; 
3.68;  3.25.  This  made  the  average  cost  of  horse-labor  per  hour 
10.1  cents,  9.01  cents,  8.63  cents,  respectively. 

The  annual  depreciation  on  farm  machinery  was  estimated,  and 
likewise  the  ''annual  value  consumed"  for  farm  machinery.  Sta- 
tistics were  carefully  gathered  to  determine  the  average  deprecia- 
tion. The  inventory  value  of  a  machine  was  based  on  the  following 
considerations :  Number  of  years  used,  manner  cared  for,  amount 
of  work  done,  repairs  during  the  year,  present  condition,  and  appar- 
ent future  usefulness;  also  possible  auction  or  exchange  value  of 
the  machine.    In  order  to  charge  properly  machinery  values  con- 


ITEMS  OF  COST  FOR  GRAIN  CROPS 


253 


sumed  in  producing  crops  it  was  necessary  to  determine  the  acre 
cost  of  each  class  of  machinery  and  distribute  it  to  the  various 
crops.  The  values  consumed  in  farm  machinery,  according  to 
these  studies,  are  made  up  of  depreciation,  labor,  and  cash  repairs, 
and  interest  on  the  average  annual  investment.  The  sum  of  these 
items  for  each  machine  divided  by  the  number  of  acres  on  which 
the  machine  is  used  gives  the  value  consumed  per  acre  per  year. 
For  the  period  1908-1912  the  average  annual  depreciation  of 
machinery  amounted  to  6.7  per  cent  as  an  average  of  all  farms  for 
all  machines.  For  some  of  the  commonly  used  machines  the  annual 
depreciation  was  as  follows:  grain  binders,  6.5  per  cent;  grain 
drills,  5.0;  corn  binders,  7.97;  mowers,  6.8;  gang  plows,  6.4;  manure 
spreaders,  10.3;  gas  engines,  5.7.  The  annual  values  consumed 
per  acre  for  commonly  used  machines  were  as  follows:  grain 
binders,  16.8  cents;  grain  drills,  7.2;  corn  binders,  60.4;  wagons 
19.5;  mowers,  16.7;  plows,  9.5. 

The  total  cost  per  acre  of  producing  field  crops  in  three  Minne- 
sota counties,  including  seed,  man-  and  horse-labor,  twine,  machin- 
ery charge,  general  expense,  and  land  rental,  was  as  follows 
(1908-1912): 

Spring  wheat,  fall  plowed 10.78 

Oats,  fall  plowed 12.02 

Barley,  fall  plowed 11.16 

Corn,  husked  in  field 14.52 

Taking  the  average  farm  prices  on  December  1  for  each  of  these 
5  years,  a  comparison  is  easily  made  between  the  yields  necessary 
to  cover  cost  of  production  and  the  yields  actually  obtained: 


Average  farm 

prices,  Dec.  1, 

1908-1912 

Yield  necessary 
to  cover  costs 

Actual  crop 
yields 

Wheat 

89.8 
35.0 
58.6 
47.8 

12  bu. 
34 

17 

Oats 

.^s 

Barley 

19                1             22 

Corn 

30                ,             41 

Items  of  Cost  for  Grain  Crops. — One  of  the  most  interesting 
features  of  the  Minnesota  reports  is  the  distribution  of  cost  per 
acre,  showing  the  very  high  per  cent  absorbed  by  labor  and  rent. 
The  following  tables  are  selected  from  the  list: 

Distribution  of  Cost  Per  Acre  in  Dollars  and  in  Per  Cents  of  Minnesota  Crops, 

1908-1912 

Wheat: 


Labor $7.92 . 

Land  rental 3.83 . 

General  expense 1.26 . 

Machinery 1.10. 

Seeds 41. 


54.5  per  cent 
26.4 

8.7 
7.6 
2.8 


254       COST  OF  PRODUCTION  AND  FARM  ACCOUNTING 

Distrihution  of  Cost  Per  Acre  in  Dollars  and  in  Per  Cents  of  Minnesota  Crops, 
1908-1912— Continued 
Oats: 

Labor $7.39 49.8  per  cent 

Land  rental 3.83 25.8 

Machinery 1.29 8.7 

General  expense 1.04 7.0        " 

Seeds 96 ..  6.5 

Twine 33 2.2 

Barley: 

Land  rental 3.83 50.9 

Labor 1.64 22.0 

Machinery 935 12.4 

General  expense 696 9.3 

Seed 41 5.4 

Cash  threshing 64 5.9 

Twine 185  1.7 

Corn  (husked  from  standing  stalks): 

Land  rental 3.83 35.5         " 

Labor 3.36 31.3 

Seed 1.37 12.7 

Machinery 74 6.9         " 

General  expense 658 6.0         " 

Miscellaneous  Factors. — ^The  cost  of*  producing  crops  depends 
on  a  number  of  factors,  among  which  are  weather  conditions  and 
crop  yields.  A  record  showing  costs  of  production  should  contain 
tables  giving  annual  precipitation  and  temperatures  during  the 
crop  season.  Crop  yields  should  also  be  presented  in  appropriate 
tables.  In  considering  farm  wages,  the  cost  of  board  should  be 
added  to  the  wage.  The  item  of  "general  expense"  is  used  to 
cover  insurance,  taxes,  and  labor  and  other  expenses  which  are 
not  chargeable  to  any  one  crop  or  productive  enterprise. 

Losses  in  Soil  Fertility. — Loss  in  soil  fertility  caused  by  crop 
production  is  not  a  proper  charge  in  cost-of-production  data. 
Where  such  a  loss  occurs,  there  is  no  proper  basis  for  calculating 
the  loss.  Some  crops,  such  as  clover  and  other  legumes,  restore 
nitrogen  to  the  soil.  The  soil  cannot  be  compared  with  machinery, 
horse-power  or  buildings  which  depreciate  constantly,  regardless 
of  management,  while  the  soil  may  be  kept  up  and  even  enriched 
by  proper  management.  It  is  a  well-known  fact  that  there  are 
many  fields  in  use  to-day  in  the  Old  World  which  have  been  in  use 
since  a  thousand  years  ago,  and  yet  which  have  more  fertility  now 
than  they  had  then — at  any  rate  their  yield  is  many  times  greater 
now.^    It  is  neither  feasible  nor  desirable  to  consider  loss  of  fertility 

2  "We  had  long  desired  to  stand  face  to  face  with  Chinese  and  Japanese 
farmers;  to  walk  through  their  fields  and  to  learn  bv  seeing  some  of  their 
methods,  appliances  and  practices  which  centuries  of  stress  and  experience 
have  led  these  oldest  farmers  in  the  world  to  adopt.  We  desired  to  learn  how 
it  is  possible,  after  twenty  and  perhaps  thirty  or  even  forty  centuries,  for  their 
soils  to  be  made  to  produce  sufficiently  for  the  maintenance  of  such  dense 
populations  as  are  living  now  in  those  countries.  We  have  now  had  this 
opportunity,  and  almost  every  day  we  were  instructed,  surprised,  amazed  at 


PROBLEMS  IN  COST  ACCOUNTING  255 

as  a  "cost^^  in  crop  production.  Fertilizers  applied  to  the  soil 
form  an  item  of  cost  which  is  definite  and  properly  chargeable 
to  costs. 

Signs  of  Progress. — Now  that  the  various  Agricultural  Experi- 
ment Stations  and  their  substations  and  their  demonstration  farms 
are  carrying  out  detailed  and  continuous  investigations  of  costs 
of  producing  farm  crops  there  is  ground  for  the  belief  that  standard 
units  of  cost  for  the  various  factors  will  be  worked  out.  These 
units  will  consist  largely  in  man-labor  hours  and  horse-labor  hours. 
The  acre  will  be  the  basis  for  both  3delds  and  costs.  In  the  end 
the  industrial  term  ''scientific  management"  will  come  to  be 
applied  to  farm  management,  in  the  sense  that  more  efficient 
systems  of  farm  management  are  to  be  established,  using  better 
machinery,  better  seed  selection,  better  crop  rotation,  better  soil 
management,  better  organizations  of  the  factors  of  land,  labor 
and  capital.  The  increasing  efficiency  of  human  labor,  working 
under  proper  organization,  is  illustrated  by  the  figures  pubHshed 
by  the  United  States  Department  of  Agriculture,  according  to 
which,  in  the  year  1855  it  required  4  hours  and  34  minutes  of 
human  labor  to  produce  one  bushel  of  corn,  while  fifty  years  later 
it  required  but  45  minutes.  Studies  in  cost  of  production  under 
varying  conditions  will,  it  is  hoped,  point  out  the  economic  limita- 
tions of  both  extensive  cultivation  and  intensive  cultivation. 

Farm  Accounting. — ^Among  the  Experiment  Stations  that  have 
worked  out  cost  accounting  systems  for  farms  mention  must  be 
made  of  two — Minnesota  and  Cornell.  Various  commercial  sets 
are  now  on  the  market.  It  is  difficult,  however,  to  interest  the 
older  generation  of  farmers  in  farm  bookkeeping,  especially  in 
any  system  of  bookkeeping  which  involves  much  time  or  labor. 
The  Experiment  Stations  are  making  a  vigorous  and  partially 
successful  effort  to  install  systems  on  progressive  farms.  The  main 
hope  must  lie  with  the  younger  farmers,  particularly  with  those 
who  have  had  courses  at  the  State  Agricultural  Colleges. 

Problems  in  Cost  Accounting. — ^As  indicated  in  the  chapter  on 
the  Economic  Conditions  of  the  Farmer,  there  are  many  factors 
in  the  farmer's  ''labor  income''  that  need  more  scientific  treat- 
ment by  trained  accountants.  If  the  farmer's  income  is  to  be 
stated  in  dollars,  it  thereby  becomes  necessary  to  place  money 

the  conditions  and  practices  which  confronted  us  whichever  way  we  turned; 
instructed  in  the  ways  and  extent  to  which  these  nations  for  centuries  have 
been  and  are  conserving  and  utilizing  their  natural  resources;  surprised  at  the 
magnitude  of  the  return  they  are  getting  from  their  fields  .  .  ." — King,  F.  H., 
Farmers  of  Forty  Centuries,  p.  2,  {Madison,  Wisconsin,  1911). 


256       COST  OF  PRODUCTION  AND  FARM  ACCOUNTING 

values  on  his  total  income,  including  house  rent  and  vegetable 
garden.  The  capital  value  of  the  investment  is  a  problem  of 
fundamental  importance,  just  as  it  is  in  the  realm  of  public  utilities 
and  in  the  public  regulation  of  rates  of  these  utilities,  particularly 
railroads.  The  "  vicious  circle  "  may  repeat  itself  here :  high  rates 
mean  high  earnings;  high  earnings  mean  high  capitalization;  high 
capitalization  justifies  higher  rates.  Why  not  the  same  circle  in 
agriculture:  high  priced  product  means  high  priced  land;  higher 
priced  land  means  larger  capitalization;  higher  capitaHzation 
justifies  higher  costs  of  production  and  higher  prices.  Since  "cost 
of  production"  is  destined  to  figure  so  prominently  in  public 
discussions,  the  question  of  the  value  placed  on  the  land  is  of 
high  importance.  The  "market  value"  is  now  used  by  various 
farm  management  specialists.  But  market  value  of  farm  land 
depends  on  the  market  value  of  the  product  of  this  land.  It  will 
therefore  be  but  going  in  a  circle  to  use  the  market  value  of  the 
land  to  determine  one  important  element  in  the  "cost  of  produc- 
tion." Yet  in  the  "  cost-of -production  "  figures  thus  far  published 
"rent"  (called  interest  on  the  investment)  forms  a  very  important 
fraction  of  the  cost.  Economic  theory  and  accounting  practice, 
now  wide  apart  in  this  matter,  must  be  harmonized,  and  some 
agreement  or  compromise  reached. 

Another  practice  in  vogue  among  farm  cost  accountants,  and 
which  runs  counter  to  principles  enunciated  by  the  Federal  Trade 
Commission,  is  that  of  counting  at  market  value  farm  products 
used  on  the  farm  in  further  production.  An  example  of  this  is 
hay  and  corn  fed  to  dairy  cows  to  produce  milk  for  the  market. 
It  is  highly  probable,  however,  that  the  farm  accountants  are  cor- 
rect in  taking  the  farm  value  of  such  products,  rather  than  their 
cost  of  production.  Of  course  it  usually  happens  that  the  farm 
value  is  above  the  cost  of  production,  although  this  is  not  always 
the  case.  Price  statistics  show  that  the  price  of  farm  products 
frequently  falls  below  the  cost  of  production.  The  farmer  is 
entitled  to  suffer  his  losses  or  enjoy  his  gains,  as  the  case  may  be. 
If  the  farmer  can  make  more,  in  the  case  above,  by  selling  his  feed- 
stuffs  on  the  market  than  by  selling  the  milk  for  the  market,  then 
he  will  and  ought  to  curtail  his  milk  production  and  sell  his  raw 
materials.  The  consumer  bidding  for  fresh  milk  must  compete 
with  the  hay  market  and  corn  market  bidding  for  raw  corn  and 
hay.  If  the  consumer  cannot  pay  this  competitive  price,  the  milk 
will  not  be  produced,  and  the  market  for  "culls"  will  see  a  few 
more  dairy  cows  culled  from  the  herds  and  sent  to  the  butcher. 


QUESTIONS  ON  THE  TEXT  257 

In  fact  the  New  York  stockyards  form  a  fair  index  to  the  status 
of  the  dairy  industry  in  the  States  surrounding  that  city.  Here 
the  number  of  milk  cows  destined  for  slaughter  fluctuates  as  the 
balance  between  feed-costs  and  milk-price  fluctuates. 

Why  Study  Cost  of  Production? — Knowledge  of  cost  of  produc- 
tion in  agriculture  is  important  both  from  the  individual  and  the 
social  viewpoint.  Society  at  large  is  becoming  more  and  more 
interested  in  price  fixing  by  commissions,  by  governmental  regu- 
lations, or  by  collective  bargaining,  as  outlined  in  the  preceding 
chapter.  And  cost  of  production  is  one  of  the  important  factors 
in  this  problem  of  price  fixing.  From  the  standpoint  of  the  indi- 
vidual farmer  cost  of  production  studies  should  show  what  par- 
ticular farms  or  what  enterprises  on  any  farm  are  being  operated 
at  a  loss.    The  foUo^ving  questions  could  be  answered: " 

How  many  marginal  producers  are  there? 

How  many  producers  are  lower  than  marginal  producers,  and 
what  amount  do  they  produce? 

How  many  producers  are  higher  than  marginal  producers  and 
what  amount  do  they  produce? 

The  submarginal  farmer,  like  the  submarginal  manufacturer, 
knowing  his  cost  of  production,  could  lower  the  unit  cost  of  his 
product,  improve  his  marketing  methods,  or  promptly  shift  to 
some  other  enterprise.  As  agriculture  is  now  organized,  many 
submarginal  farmers  actually  continue  year  after  year  to  farm  at  a 
loss,  before  definite  and  conscious  insolvency  drives  them  from  the 
unprosperous  acres.  Perhaps  in  no  other  business  does  anyone 
or  can  anyone  continue  so  long  to  labor  at  a  net  loss. 
QUESTIONS  ON  THE  TEXT 

1.  Compare  manufacturing  and  agriculture  as  to  the  use  made  of  cost 

accounting. 

2.  Show  that  the  farmer  is  an  entrepreneur. 

3.  What  principle  does  the  Babcock  test  illustrate? 

4.  Show  what  is  being  done  to-day  in  studying  cost  accounting  in  agriculture. 

5.  What  cost  units  were  used  in  the  Minnesota  studies?    Define  each. 

6.  Show  the  factors  in  cost  of  production  in  addition  to  labor  costs. 

7.  Which  factors  are  most  important? 

8.  Is  "cheap  labor"  desirable? 

9.  Give  some  cost  figures  for  Iowa  corn,  barley,  oats,  wheat. 

10.  Give  some  Wisconsin  cost  figures  for  oats,  barley,  rye,  wheat.     How  do 

they  compare  with  the  Iowa  figures? 

11.  Explain  the  Minnesota  method  of  accounting  for  annual  depreciation  of 

farm  machinery  and  annual  value  consumed. 

12.  Compare  cost  of  producing  Minnesota  field  crops  with  same  crops  in  Iowa 

and  Wisconsin. 

13.  Should  loss  of  soil  fertihty  be  included  in  costs  of  production?    Reasons 

for  your  answer. 

14.  What  are  the  signs  of  progress  in  cost  accounting  in  agriculture? 

17 


258       COST  OF  PRODUCTION  AND  FARM  ACCOUNTING 

15.  State  some  unsettled  problems  in  farm  accounting. 

16.  Show  danger  of  the  so-called  "vicious  circle"  in  farm  accounting. 

17.  What  is  the  correct  accounting  practice  for  value  of  farm  products  used 

on  the  farm  for  further  production? 

18.  State  the  objects  to  be  gained  by  knowledge  of  cost  of  production  on  farms. 

19.  Show  why  farmers  may  unconsciously  continue  for  years  to  farm  at  a  loss. 

20.  Compare  hours  of  labor  per  acre  (man-hours  and  horse-hours)  required 

in  Minnesota  to  produce  wheat  and  potatoes. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  What  principle  should  govern  in  calculating  the  value  of  the  land  used  in 

crop  production? 

2.  From  the  standpoint  of  poUtical  economy,  is  "rent"  an  item  in  the  cost 

of  production? 

3.  From  the  standpoint  of  the  Single  Taxer,  the  private  appropriation  of 

ground  rent  is  a  special  privilege  which  should  be  aboUshed.     Briefly 
state  the  main  reasons  for  or  against  this  theory. 

REFERENCES 

The  Experiment  Stations  and  the  48  Agricultural  College's  are  constantly 
studying  the  costs  of  producing  farm  crops.  Results  of  these  studies  are 
published  from  time  to  time  in  bulletins  and  distributed  gratis  to  those  re- 
questing copies.  These  bulletins  constitute  the  best  sources  of  information 
on  this  subject.    Only  a  few  of  these  can  be  listed  here. 

1.  "Industrial  Commission  Report,"  Vol.  10,  p.  CCXII,  Washington, 
1898—1902 

2.  Hays,  W.  M.,  and  Parker,  E.  C:  "The  Cost  of  Farm  Products," 
Bulletin  48,  Bureau  of  Statistics,  IJnited  States  Department  of  Agriculture, 
Washington;  and  Bulletin  97,  Minnesota  Experiment  Station,  St.  Paul,  1906. 
(This  is  a  pioneer  study  in  this  field.) 

3.  Parker,  E.  C,  and  Cooper,  Thomas:  "The  Cost  of  Producing  Minne- 
sota Farm  Products,"  Bulletin  73,  Bureau  of  Statistics,  United  States  Depart- 
ment of  Agriculture;  and  Bulletin  117,  Minnesota  Experiment  Station,  St. 
Paul,  1910. 

4.  Peck,  F.  W.:  "The  Cost  of  Producing  Minnesota  Farm  Products," 
1908-1912.  Bulletin  145,  Minnesota  Agricultural  Experiment  Station,  St. 
Paul,  1914. 

5.  Peck,  F.  W.:  "The  Cost  of  Producing  Minnesota  Field  Crops,"  1913- 
1917.  Bulletin  179,  University  of  Minnesota  Agricultural  Experiment  Station, 
St.  Paul,  November,  1918. 

6.  Peck,  F.  W.,  and  Boss,  Andrew:  "The  Cost  of  Milk  Production," 
Minnesota  Agricultural  Experiment  Station,  Bulletin  173,  1918. 

7.  Cooper,  T.  P.,  Peck,  F.  W.,  and  Boss,  Andrew,  Bulletin  157,  Minne- 
sota Agricultural  Experiment  Station,  St.  Paul,  1916. 

8.  Cooper,  Thomas:  "The  Cost  of  Minnesota  Dairy  Products."  United 
States  Department  of  Agriculture,  Bureau  of  Statistics,  Bulletin  88,  and 
Minnesota  Agricultural  Experiment  Station,  Bulletin  124,  1911. 

9.  Boss,  Andrew,  Peck,  F.  W.,  and  Cooper,  T.  P.:  "Labor  Require- 
ments of  Live  Stock."  Minnesota  Agricultural  Experiment  Station,  Bulletin 
161,  1916. 

10.  Boss,  Andrew,  Benton,  A.  H.,  and  Caveft,  W.  L  :  "A  Farm  Man- 
agement Studj^  in  Southeastern  Minnesota."  Bulletin  172,  University  of 
Minnesota  Agricultural  Experiment  Station,  October,  1917. 

11.  Warren,  G.  F.:    "Farm  Management,"  New  York,  1916. 

12.  Duncan,  C.  S.:  "Mercantile  and  Agricultural  Economics,"  Journal 
of  Political  Economy,  October,  1918,  pp.  769-806. 

13.  Orwin,  C.  S.:  "The  Determination  of  Farming  Costs,"  Oxford,  Eng- 
land. 1917. 


APPENDIX  259 

14.  Thomson,  Edward  H. :  "Farm  Bookkeeping,"  Farmers  Bulletin  511, 
United  States  Department  of  Agriculture,  Washington. 

15.  Bexell,  J.  A.:  "The  Business  Side  of  Farming,"  Farm  Records, 
Oregon  Agricultural  College,  Corvallis,  1909. 

16.  a!nderson,  a.  C,  and  Riddell,  F.  T. :  "Studies  in  the  Cost  of  Market 
Milk  Production,"  Bulletin  277,  Michigan  Agricultural  College,  December,  1916. 

17.  Ladd,  C.  E.:  "Cost  Accounts  on  Some  New  York  Farms,"  Bulletin 
377,  Cornell  University  Agricultural  Experiment  Station,  June,  1916. 

18.  Hennis,  C.  M.,  and  Willard,  Rex  E.:  "Farm  Practices  in  Grain 
Farming  in  North  Dakota,"  Bulletin  757,  U.  S.  Dept.  of  Agriculture,  1919. 

19.  "Cost  of  Produciag  the  1918  Cotton  Crop."  By  the  Department  of 
Agriculture  of  Texas.    Austin  Texas,  1918. 

20.  Farm  Account  Book.  Prepared  by  Ohio  Bankers  Association  and  the 
Agricultural  Extension  Service  of  the  Ohio  State  University,  Columbus,  Ohio. 

21.  "Report  of  the  Governor's  Tri-State  MUk  Commission"  (Pennsyl- 
vania, Maryland,  Delaware).  Bulletin  287,  Department  of  Agriculture,  Har- 
risburg,  Pennsylvania,  1917. 

22.  Ladd,  C.  E.  :  "A  System  of  Farm  Cost  Accounting,"  Farmers'  Bulletin 
No.  572,  U.  S.  Department  of  Agriculture,  1914;  Reprinted  1915. 

APPENDIX 
Cost  of  Production  of  Com,  Barley,  Oats  and  Wheat. — ^As  an  example  of 
the  work  being  done  by  the  leading  state  experiment  stations  in  determining 
cost  of  producing  farm  crops,  the  following  tables  are  given,  taken  from  the 
station  at  Amos,  Iowa.  The  figures  were  compiled  in  1917,  using  $2.00  as  the 
cost  of  man  labor  per  day,  and  $1.50  as  the  cost  of  horse  labor  per  day. 

Cost  of  Producing  Corn  Per  Acre  (Iowa)  1917 

Rent $5.44 

Plowing  (gang) 1.882 

Discing  before  plowing .561 

Discing  after  plowing .701 

Harrowing .632 

Planting 367 

Harrowing  after  planting .152 

Cultivating,  first  time .915 

Cultivating,  second  time .798 

Cultivating,  third  time 676 

Cultivating,  fourth  time .551 

Depreciation  and  interest: 

wagon .072 

rack 024 

harrow .024 

disc 035 

corn  planter .067 

harness .052 

cultivator .059 

gang 069 

Seed  corn 427 

Testing  seed  corn .058 

Grading 014 

Total  (growing  the  crop) $13,576 

Average  yield — 54.64  bu.  j 

Cost  of  growing  the  crop  per  bu. — .248.  ^ 

Harvesting  the  Crop  {Per  Bu.) 

1 .  By  picking  in  field 10 

2.  Cutting  and  shocking  by  hand 027 

Husking  from  shock 137 


3.  Cutting  with  binder 021 

Shocking 010 

Husking  fiom  shock 137 


4.   Cutting  wilh  binder 021 

Stacking 006 


.164 

.168 

.027 


260       COST  OF  PRODUCTION  AND  FARM  ACCOUNTING 

Cost  of  Producing  Barley  Per  Acre  (Iowa),  1917 

Rent $5.44 

Discing  before  seeding 816 

Harrowing  before  seeding ,134 

Seeding  with  drill 578 

Discing  after  drilling 336 

Harrowing  after  drilling 372 

Twine.  .  .  : 300 

Harvesting 598 

Shocking 238 

Depreciation  and  interest: 

harrow 024 

disc 035 

binder 453 

drill 234 

fanning  mill 054 

wagon 072 

rack 024 

harness 052 

Seed  (2.13  bu@  .619  per  bu.) 1.318 

Cleaning  seed 066 

Threshing 646 

Cost  of  extra  help 610 

Total  cost  per  acre $12.40 

Yield— 26.93  bu.     Cost  per  bu.— .46. 

Cost  of  Producing  Oats  Per  Acre  (Iowa),  1917 

Rent $5.44 

Breaking  stalks 230 

Discing  before  seeding 672 

Harrowing  before  seeding ,100 

Seeding  with  drill 578 

Discing  after  seeding 538 

Harrowing  after  seeding 309 

Harvesting 598 

Twine 370 

Shocking 238 

Depreciation  and  interest: 

binder 453 

drill 234 

harrow 024 

fanning  mill 054 

wagon 072 

rack 024 

disc 035 

harness .052 

Seed  (2.95  bu.  @  .388  per  bu.) 1.145 

Cleaning  seed 091 

Threshing 944 

Cost  of  extra  labor , 744 

Total  cost  per  acre $12,945 

Yield — 42.89  bu.     Cost  per  bu.— .302. 

Cost  of  Producing  Winter  Wheat  Per  Acre  (Iowa),  1917 

Rent $5.44 

Discing  before  plowing 145 

Plowing  with  gang 1.882 

Discing  after  plowing 382 

Harrowing  after  plowing 583 

Drilling 578 

Harrowing  in  spring 202 

Harvesting 598 

Twine 300 

Shocking 238 

Depreciation  and  interest: 

plow 069 

harrow 024 

disc 035 

binder 453 

drill 234 

fanning  mill 054 

wagon 072 

(Carried  forward) 


APPENDIX  26i 

Depreciation  and  interest: — Continued. 

rack $0,024 

harness 052 

Seed  (1.58  bu.  @  .938  per  bu.) 1.482 

Cleaning  seed 049 

Threshing ' 1.054 

Extra  help 886 

Total  cost  per  acre $14,836 

Yield  per  acre — 25.09  bu. 
Cost  per  bu. — .591. 

Cost  of  Producing  Spring  Wheat  Per  Acre  (Iowa),  1917 

Rent $5.44 

Plowing  (gang) 245 

Harrowing 141 

Discing 886 

Seeding 578 

Discing  after  seeding ' 695 

Harvesting 598 

Twine 300 

Shocking 238 

Depreciation  and  interest: 

glow 069 
arrow 024 

disc 035 

binder 453 

drill 234 

fanfling  mill. ...    054 

wagon 072 

rack 024 

harness 052 

Seed  (1.68  bu.  @  .942  per  bu.) 1.415 

Cleaning  seed 052 

Threshing 705 

Cost  of  extra  help 572 


Total  cost  per  acre $12,882 

Yield  per  acre — 16.79  bu. 
Cost  per  bu. — .767. 

Average  Annual  Hours  of  Labor  Per  Acre  in  Producing  Field  Crops,  1902-1912 

{Minnesota) 

Man-hours   Horse-hours 

Wheat,  shock  threshed 12.3 29.9 

Oats,  shock  threshed 13.5 28.9 

Barley,  shock  threshed 12.8 29.9 

Fall  rye,  shock  threshed 10.3 27.2 

Flax,  stack  threshed 13.7 33.8 

Corn,  husked 26.2 54.2 

Fodder  corn,  cut,  shocked,  stacked 30.4 52.6 

Ensilage 32.6 59.8 

Potatoes 44.4 75.0 

Hay,  timothy  and  clover,  first  crop 12.3 13.0 

Hay,  timothy  and  clover,  two  cuttings 20.7 21.5 

Hay,  wild 12.2 16.9 

Farm  Accounting — a  Backward  Science. — An  Example  from  England. — 

''  The  general  absence  amongst  farmers  of  any  system  whatever  of  bookkeeping 
is  a  deplorable  fact.  The  Royal  Commission  on  Agricultural  Depression  of 
1897  clearly  showed  that  this  bad  habit  was  very  general.  In  one  district  of 
about  50,000  acres,  only  one  farmer  could  be  found  who  kept  accounts.  Some 
vears  ago  the  agricultural  correspondent  of  the  Yorkshire  Post  inspected  a 
large  number  of  farms  in  Yorkshire,  and  only  in  one  case  out  of  a  hundred 
farms  visited  were  any  accounts  whatever  kept.  This  is  sad,  and  aU  the  more 
so  as  the  art  of  bookkeeping  is  an  easily  acquired  one." — Jackson,  T.  C,  The 
Agricultural  Holdings  Acts,  1908-1914,  ct^  Tenant-Right  Valuation.  London, 
1917,  p.  181. 


CHAPTER  XVII 

SPECULATION 

There  are  in  the  higher  courts  in  the  United  States  to-day  one 
thousand  judges,  more  or  less,  whose  duty  it  is  to  interpret  the 
Federal  and  State  laws.  That  such  a  large  body  of  specially  trained 
men  is  necessary  to  construe  the  meaning  of  carefully-framed 
statutes  illustrates  very  strikingly  the  looseness  of  meaning  which 
is  likely  to  attach  to  even  deliberately  chosen  words.  Little  won- 
der is  it,  therefore,  that  many  words  current  in  the  daily  speech 
of  the  people  have  such  a  looseness  and  vagueness  of  meaning  that 
they  mean  different  things  to  different  people,  and  to  the  same 
people  at  different  times.  The  word  speculation  is  a  word  which 
stands  out  conspicuously  in  this  class' of  populaf  but  indefinite 
terms.  This  means  that  there  is  confused  thinking  on  this  import- 
ant topic,  where  clear  thinking  is  needed.  There  is  vagueness 
where  there  should  be  sharp  distinctions.  Before  discussing  what 
speculation  is,  what  its  services  are  and  its  evils,  it  will  be  the 
wisest  course  for  us  to  differentiate  sharply  a  few  terms  which 
are  frequently  confused  with  speculation. 

Some  Misused  Terms. — (1)  Hoarding. — In  times  of  stress, 
particularly  in  war  times  or  in  times  of  great  scarcity  of  any  food 
commodity,  the  word  ''hoarding"  is  freely  used  in  a  depreciative 
sense.  It  is  true  that  in  ordinary  times,  when  the  thrifty  house- 
wife stocks  up  her  cellars  in  the  autumn  with  an  ample  hoard  of 
apples,  potatoes,  cabbages,  turnips,  pickles,  preserves,  jellies, 
jams,  butters,  canned  fruits  and  vegetables,  and  so  on,  she  is 
considered  as  doing  a  highly  praiseworthy  thing.  When  a  dealer, 
however,  buys  from  the  farmer  in  the  autumn  apples  and  potatoes 
and  stores  these  in  a  suitable  warehouse,  for  use  later  on,  this 
dealer  is  likely  to  be  denounced  as  a  speculator  and  guilty  of 
''hoarding."  If  apples  and  potatoes  are  harvested  only  in  the 
warmer  months  of  the  year,  which  is  nature's  provision,  and  if 
these  same  products  are  to  be  eaten  in  part  in  the  cold  months  of 
the  year,  which  is  man's  custom,  manifestly  these  products  must 
be  "hoarded"  by  somebody,  who  is  performing  thereby  a  pubUc 
service.  In  the  ancient  sense  of  the  word,  hoarding  implied 
secrecy,  but  as  the  term  is  now  applied  to  the  dealers  in  agricul- 
tural products  it  has  no  such  connotation.  Potatoes  stored  in  a 
262 


CASH  AND  FUTURE  TRADING  263 

warehouse  for  the  winter  by  a  farmers'  cooperative  potato  growers' 
association  or  farmers'  cooperative  elevator  company,  is,  in  popular 
speech,  not  hoarding;  potatoes  stored  in  an  adjoining  warehouse 
owned  by  a  dealer  is,  in  popular  speech,  hoarding.  Evidently  the 
term  is  used  to  connote  a  practice  tainted  with  evil.  Such  a  word, 
used  in  such  a  manner,  may  shed  much  heat  and  but  Httle  hght 
on  the  subject  under  discussion.  The  term  does  not  correctly 
define  or  describe.  On  the  contrary,  it  is  a  subtle  appeal  to  the 
feelings,  to  prejudice.  The  ''hoarder"  of  potatoes  in  the  fall  of 
1918  paid  the  growers  one  dollar  a  bushel,  and  sold  these  same  pota- 
toes (if  they  had  not  decayed  in  the  winter)  for  seventy-five  cents 
a  bushel  in  March  following.  Such  a  decline  in  price  in  the  spring 
happens  with  unpredictable  regularity  with  all  farm  crops. 
''Hoarding,"  therefore,  is  a  word  which  should  be  no  longer  used 
in  the  present  heedless  and  unthinking  manner. 

(2)  Cornering  the  Markets. — Under  primitive  market  condi- 
tions, particularly  where  means  of  transportation  were  lacking, 
shrewd  and  bold  dealers  were  wont  to  corner  the  market  for  short 
periods.  Many  the  laws,  ancient  and  modern,  against  this  anti- 
social practice!  Under  twentieth  century  conditions  this  con- 
demned practice  is  of  sporadic  occurrence,  particularly  in  the 
unorganized  markets.  On  the  organized  grain  exchanges,  in  con- 
trast, where  strict  rules  exist  against  this  practice,  it  is  now  prac- 
tically extinct.  The  last  cornering  of  the  wheat  market  occurred 
during  the  World  War,  and  was  done  quite  unintentionally  by  the 
Allies  in  buying  certain  grades  of  wheat  in  excess  of  the  supply 
of  these  grades.  In  other  words,  contracts  for  the  best  grades  of 
wheat  were  made,  not  to  corner  the  market  and  affect  price,  but 
to  secure  actual  wheat  in  large  and  certain  quantities.  Cornering, 
long  under  the  social  and  legal  ban,  is  still  confused  by  many 
writers  and  speakers  with  speculation.  Speculation  is  going  on 
every  day,  and  much  of  it  unavoidably  so,  while  cornering  exists 
in  but  rare  and  isolated  cases.  The  two  terms  should  not  be  used 
as  synonyms,  although  this  slovenly  habit  of  thinking  and  speaking 
is  all  too  common. 

(3)  Cash  and  Future  Trading. — Again,  the  popular  vocabulary 
betrays  an  irresponsible  looseness  of  thinking  concerning  that 
phase  of  the  grain  trade  having  to  do  with  cash  as  against  future 
trading  in  grain.  The  phrase  "speculation  in  grain"  is  quite 
generally  applied  to  future  trading.  And,  conversely,  trading  in 
cash  grain  is  quite  generally  regarded  by  the  public  as  free  from 
"speculation."    Many  bills  introduced  in  State  legislatures  indi- 


264  SPECULATION 

cate  this  state  of  mind.  But  it  is  obvious  that  it  is  just  as  specu- 
lative to  buy  cash  grain,  expecting  to  hold  it  for  a  rise  in  price, 
as  it  is  to  contract  to  buy  grain  in  the  future,  expecting  a  rise  in 
price.  Both  transactions  give  title  to  grain.  Both  are  based  on 
the  behef  that  the  market  is  too  low.  The  following  concrete  case 
illustrates  a  speculation  in  cash  grain.  The  Superior  (Nebraska) 
Corn  Products  Company  became  a  heavy  dealer  in  corn  in  the 
spring  of  1917.  From  February  on  for  some  months  the  business 
was  reported  as  ''big."  Corn  was  bought  and  sold  in  car  lots. 
Futures  were  not  traded  in.  On  August  18,  1917,  occurred  the 
failure  of  this  concern.  The  cause  of  this  failure  was  speculation 
in  cash  grain,  long  on  corn  when  the  market  slumped.  This  slump 
occurred  on  August  8,  and  continued  to  August  11,  amounting  in 
all  to  fifty  cents  a  bushel.  On  Wednesday,  August  8,  the  buyers 
of  this  company  bought  75,000  bushels  of  corn  by  telephone  at 
the  closing  price  of  the  day  before,  before  the  Grain  Exchanges 
had  begim  the  day's  trading  and  wired  the  new  prices  to  the 
country.  The  break  began,  as  noted,  and  continued  four  days. 
This  drop  in  price  foimd  this  company  long  175,000  bushels  of 
cash  corn.  This  meant  the  financial  ruin  of  the  company,  and  a 
consequent  wiping  out  of  all  its  assets.  The  case  is  interesting  as 
showing  that  speculation  is  speculation,  whether  in  cash  or  future 
grain.  It  is  also  interesting  in  showing  what  may  happen  to  a 
grain  business  that  does  not  hedge,  i.e.,  protect  its  cash  purchaser 
by  corresponding  future  sales,  and  thus  avoid  speculation  by  the 
ordinary  use  of  futures. 

Two  Social  Classes. — There  are  now,  and  apparently  always 
have  been,  and  always  will  be,  two  classes  in  society,  the  conserv- 
atives and  the  liberals.  That  this  is  true  in  politics  and  religion 
is  a  matter  of  common  observation.  It  is  equally  true  in  our 
economic  life.  Deposits  in  our  savings  banks,  investments  in 
government  bonds,  and  in  other  safe  and  low-interest  rate  securi- 
ties show  the  existence  of  a  numerous  class  of  economic  conserva- 
tives. Many  strong  bond  houses  had,  before  the  World  War,  a 
large  purchasing  clientele  seeking  four  and  five  per  cent  invest- 
ments. Safety  of  principal  rather  than  size  of  return  is  the  desider- 
atum with  these  investors.  Other  financial  houses  advertise 
investments  yielding  ten  or  twelve  per  cent.  These  investments 
attract  a  less  conservative  group  or  a  group  less  sophisticated  in 
investment  economics.  Lastly  there  is  the  group  of  securities 
with  no  past  record  of  performance,  but  with  a  promised  ''assured 
future"  of  high  yields,  varying  according  to  the  imagination  and 


THESE  DEFINITIONS  ,  265 

restraint  of  the  promoter.  This  class  appeals  to  the  speculators, 
especially  to  those  "economic  illiterates"  in  our  society.  It  is  an 
obvious  fact  that  society  does  include  the  two  classes,  conserva- 
tives and  liberals,  risk  takers  and  risk  avoiders.  Each  class  plays 
an  important  and  necessary  part  in  opening  up  and  developing 
the  resources  of  the  country.  For  even  the  much-haloed  Pilgrim 
Fathers  were  settled  in  America  by  a  company  of  merchant 
''Adventurers,"  as  speculative  risk  takers  were  then  termed.^ 

We  have  with  us  now,  as  society  had  in  times  past,  a  class 
wilUng  to  take  risks,  ready  and  wilhng  to  speculate.  It  may  be 
stated  as  a  correct  principle  that  an  American  citizen,  with  intel- 
ligence and  means,  has  a  right  to  speculate  in  town  lots,  in  agri- 
cultural lands,  in  grain,  or  in  anything  else,  as  long  as  his  conduct 
does  not  interfere  mth  the  rights  of  others  or  damage  society  in 
any  way. 

What  does  society  want,  then,  in  the  field  of  speculation?  To 
abolish  speculation?  That  is  clearly  impossible,  as  well  as  unde- 
sirable. The  answer  must  be,  to  retain  the  good  in  speculation 
and  curb  the  evil. 

1.  What  is  Speculation? — ^As  stated  earUer  in  this  chapter  the 
popular  understanding  of  this  word  is  somewhat  vague.  The  word 
is  commonly  used  in  a  depreciative  sense,  and  not  in  the  honorable 
sense  of  the  old  word  "adventurers."  The  definitions  found  in 
Webster's  dictionary  are  interesting  to  note.    They  nm  as  follows : 

Speculate. — To  purchase  with  the  expectation  of  a  contingent  advance 
in  value,  and  a  consequent  sale  at  a  profit;  often,  in  a  somewhat  depreciative 
sense,  of  unsound  or  hazardous  transactions;  as,  to  speculate  in  coffee,  in 
sugar,  or  in  bank  stock. 

Speculation. — ^The  act  or  practice  of  buying  land,  goods,  shares,  etc. ,  in 
expectation  of  seUing  at  a  higher  price,  or  of  selling  with  the  expectation  of 
repurchasing  at  a  lower  price ;  a  trading  on  anticipated  fluctuations  in 
price,  as  distinguished  from  trading  in  which  the  profit  expected  is  the  dif- 
ference between  the  retail  and  wholesale  prices,  or  the  difference  in  price  in 
different  markets. 

Gamble. — To  play  or  game  for  money  or  other  stake.  To  play  for  a  stake 
or  prize;  to  use  cards,  dice,  billards,  or  other  instruments,  according  to  certain 
rules,  with  a  view  to  win  money  or  other  things  waged  upon  the  issue  of 
the  contest. 

These  definitions  are  substantially  in  agreement  with  the 
accredited  economic  usage  of  these  terms.  According  to  these 
definitions,  a  retail  merchant  is  not  a  speculator,  since  he  buys 
and  sells  with  little  or  no  regard  to  price  fluctuations.    His  margin 

^  See  Appendix  to  this  chapter  for  an  excerpt  from  the  original  charter  of 
this  company,  showing  its  speculative  commercial  nature. 


266  SPECULATION 

is  the  difference  between  wholesale  and  retail  prices.  On  the 
other  hand,  the  speculative  buyer  is  one  who  expects  the  price 
to  rise,  and  is  willing  to  back  up  his  belief  with  his  money.  His 
profit,  if  any,  must  come  from  a  rise  in  price.  Or  conversely,  the 
speculative  seller  (short  seller)  is  one  who  believes  prices  are  going 
to  fall,  and  who  sells  for  future  delivery,  expecting  to  buy  at  or 
before  delivery  time  at  less  than  his  sale  price.  These  definitions 
omit  the  original  grower  of  farm  products  from  the  category  of 
speculator.  This  is  an  arbitrary  rule.  For  the  essence  of  specu- 
lation is  risk,  and  the  grower  is  the  first  risk  taker. 

Webster's  definition  of  gambling  is  also  given,  since  these  two 
terms  are  commonly  juggled  together  as  though  they  were  syn- 
onyms. This  confusion  should  not  be  tolerated.  Professor  Emery's 
distinction  between  speculation  and  gambling  is  now  quite  widely 
accepted.  Speculation  he  makes  the  assumption  of  inevitable 
economic  risks.  In  other  words,  if  the  crop  is  produced,  the  price 
is  likely  to  change — is,  in  fact,  certain  to  rise  or  fall,  and  hence 
the  owner  for  the  time  being  is  the  risk  taker.  The  risk  may  be 
shifted  to  a  speculator,  who  is  the  person  who  prefei-s  to  assume 
the  risk.  Such  risks  may  be  shifted  or  distributed,  but  can  never 
be  abolished.  Gambling  is,  according  to  Emery,  the  assumption 
of  a  ''chance"  or  ''risk, "  which  risk  the  gamblers  themselves  have 
manufactured.  It  is  artificial.  Thus  two  men  may  sit  down  in  a 
back  room  and  bet,  for  instance,  one  hundred  dollars  each  on  the 
outcome  of  a  horse  race,  or  on  a  foot  ball  game,  or  on  the  election 
of  the  President  of  the  United  States,  or  on  the  price  of  grain 
next  week,  or  on  the  state  of  tomorrow's  weather.  Obviously  the 
risk  of  winning  or  losing  the  hundred  dollars  was  manufactured 
by  the  wills  of  these  gamblers  themselves,  and  that  without  the 
bet,  the  money  would  have  remained  safe  in  their  pockets.  But 
the  owner  of  a  commodity  is  by  his  ownership  the  bearer  of  an 
inevitable  risk,  whether  he  wills  it  or  not.  To  the  superficial 
observer,  trading  in  futures  on  the  great  Grain  Exchanges  is  mere 
betting  on  the  price  of  grain.  This  was  true  of  the  late  bucket 
shops  of  the  country,  for  in  these  places  "orders"  to  buy  and  sell 
grain  were  not  executed  on  any  market.  These  fake  "orders" 
were  bets,  and  hence  gambling  transactions.  The  five  or  six 
important  grain  exchanges,  where  future  trading  in  grain  is  carried 
on  in  the  United  States,  do  not  come  in  this  class,  since  every  buy 
or  sell  order  is  actually  executed,  and  thus  has  its  proportionate 
influence  on  the  market.  Each  order  is  payable  in  actual  grain, 
although  most  of  them  will  not  be  so  paid,  just  as  the  twenty 


TWO  KINDS  OF  SPECULATION  267 

billion  dollars  of  bank  deposits,  subject  to  check,  and  payable  on 
demand  in  gold  will  not  be  so  paid  (except  in  small  part),  and  do 
not  need  to  be  so  paid  to  meet  the  needs  of  sound  business.  That 
these  demand  deposits  are  actually  six  or  seven  times  the  whole 
amount  of  gold  in  the  country  in  no  way  reflects  on  the  ethics 
or  soundness  of  American  banking.  Quite  the  contrary.  It  is  an 
evidence  of  a  properly  functioning  banking  system.  It  will  be 
necessary  to  defer  until  the  chapter  on  the  Grain  Trade  any  further 
explanations  of  the  methods  of  settling  the  large  volume  of  future 
trading  in  grain  by  the  delivery  of  a  relatively  small  amount 
of  grain. 

Two  Kinds  of  Speculation. — In  the  field  of  Agriculture  to-day 
speculation  is  of  two  kinds,  organized  and  unorganized.  Organ- 
ized speculation  is  that  form  of  speculation  conducted  on  the 
organized  exchanges  of  the  country;  it  is  under  strict  rules,  which 
are  published  and  open  and  known  to  all  interested ;  it  is  conducted 
openly  before  the  public  gaze;  the  volume  of  it,  together  with 
actual  prices  involved,  is  made  a  matter  of  formal  record  and  is 
also  very  largely  given  to  the  public  by  means  of  the  daily  press 
and  the  trade  papers.  Unorganized  speculation,  on  the  other  hand, 
is  not  conducted  under  any  particular  rules;  it  is  not  carried  on 
in  the  open  light  of  full  publicity;  the  volume  and  nature  of  it 
are  not  a  matter  of  record,  and  are  not  known. 

Organized  speculation  is  best  illustrated  by  the  trading  in 
grain  and  cotton  on  the  organized  exchanges.  Unorganized 
speculation  is  illustrated  by  trading  in  farm  lands — particularly 
the  promotion  of  land  sales  by  real  estate  agents,  so-called.  It 
is  also  illustrated  by  the  trading  in  the  various  forms  of  farm 
produce  not  handled  on  the  exchanges,  such  as  fruits,  vegetables, 
poultry,  etc.  Since  there  are,  in  the  case  of  these  products,  no 
great  organized  exchanges,  with  severe  membership  qualifications 
both  ethical  and  financial,  as  is  the  case  with  grain  exchanges, 
it  is  exactly  in  these  products  that  we  find  most  frequent  market 
abuses.  As  an  extreme  illustration  of  this  may  be  cited  the  poultry 
market  in  New  York  City  which  for  some  years  remained  an  open 
scandal.  Live  chickens  would  be  bought  by  a  certain  class  of 
dealers,  kept  without  food  for  two  or  three  days,  and  then  be  fed 
heavily  with  sand,  gravel,  and  cement.  In  this  manner  consumers 
were  buying  daily  thousands  of  pounds  of  sand,  gravel,  etc.,  at 
fresh  chicken  prices.  This  abuse,  great  as  it  was,  cannot  be  attri- 
buted solely  to  the  speculative  nature  of  the  business.  Doubtless 
there  have  been  and  now  are  a  few  farmers  who  follow  similar 


268  SPECULATION 

practices,  and  the  farmer,  thus  far  has  not  been  called  a 
''speculator." 

The  butter  exchanges  in  the  United  States  have  thus  far  fallen 
far  short  of  complete  success,  owing  to  their  small  membership 
and  small  volume  of  trade. 

2.  Speculation:  Its  Services. — ^At  the  very  outset  it  must  be 
stated  and  emphasized  that  the  code  of  ethics  of  the  speculator, 
organized  and  unorganized,  is  exactly  as  high  as  that  of  the  pro- 
ducers and  consumers  about  him.  This  means  that  a  very  large 
majority  of  the  so-called  speculative  traders  (commission  mer- 
chants, jobbers,  ''middlemen"  in  general)  are  honorable  and  con- 
structive members  of  society  and  of  their  community;  that  a 
very  small  minority  of  them  are  "black  sheep" — the  traditional 
rule  for  all  flocks.  And  in  the  second  place  it  must  be  stated  and 
emphasized  that  the  large  manufacturers  of  food  products  cannot 
deal  with  widely  scattered,  unknown  individual  farmers,  and  can- 
not do  collective  bargaining  with  unorganized  farmers,  and  hence 
the  farmer's  market  at  the  present  stage  of  economic  evolution 
must  be  with  the  men  who  stand  between  him  and  the  miller, 
the  packer,  the  canner,  the  spinner,  and  so  on.  In  other  words, 
the  speculator  makes  the  market  for  the  farmer's  products.  The 
chief  service  of  the  speculator  is  to  create  this  continuous  market. 
This  function  is  not  appreciated  till  it  is  interrupted  by  war  or 
other  calamity.  This  truth,  recorded  in  the  proverb,  "You  never 
miss  the  water  till  the  well  runs  dry,"  may  be  illustrated  by  the 
case  of  the  California  Bean  Growers.  In  December,  1918,  the 
California  Market  Director  reported  the  following  situation  among 
the  farmers  of  that  State,  when  the  speculator  was  partially  forced 
out  of  the  market: 

"...  It  has  been  pointed  out  that  had  there  been  no  bean  growers'  asso- 
ciation in  1918,  the  results  would  have  been  most  disastrous  to  the  California 
bean  industry.  The  conditions  facing  the  growers  were  in  the  nature  of  an 
unprecedented  combination  of  unfavorable  circumstances. 

"The  small  limit  which  the  Federal  Food  Administration  has  placed  on 
the  profits  to  be  allowed  to  the  speculative  buyer,  had  completely  destroyed 
his  speculative  interest  in  the  product.  As  a  consequence,  he  was  unwilling 
to  buy  except  from  hand  to  mouth.  This  left  the  producer  with  no  buyers 
except  for  the  merest  handful  of  his  product.  Furthermore,  the  banks,  with 
abnormal  demands  made  on  them  by  the  government,  with  large  advances 
made  by  them  to  barley  and  to  other  growers,  with  a  weak  and  decUning  bean 
market  staring  them  in  the  face,  were  in  no  frame  of  mind  to  look  with  favor 
upon  requests  for  financial  accommodations  coming  from  bean  growers.  On 
top  of  it  all,  the  bean  grower  found  himself  faced  with  demands  upon  him  for 
ready  cash  to  meet  his  abnormal  cost  of  production  that  stressed  him  to  the  limit.^ 

2  Third  Annual  Report,  State  Market  Director  of  CaUfornia,  1918,  pp. 
68,  69. 


A  THIRD  FUNCTION  PERFORMED  BY  SPECULATORS     269 

This  quotation  also  illustrates  the  truth  that  to  the  extent 
that  producers  are  organized  and  able  to  conduct  collective  bar- 
gaining, to  that  extent  the  need  of  speculative  buyers  is  lessened 
and  to  the  same  extent  ''direct  marketing"  with  manufacturers, 
canners,  exporters,  wholesalers,  etc.,  is  made  possible.  Obviously, 
however,  the  speculator  by  making  a  market  is  thereby  performing 
a  service  and  deserves  credit  rather  than  condemnation  for  it. 

A  second  fimctioii  of  the  speculator  may  be  called  his  financial 
or  banking  function.  In  many  lines  of  trade  the  speculator  may 
be  called  on  to  finance  the  movement  of  the  crop  from  the  prindary 
point  to  the  larger,  central  markets.  He  becomes,  in  a  sense,  the 
banker  for  his  shippers,  commonly  advancing  them  money  before 
the  arrival  of  the  goods,  and  in  some  cases,  many  weeks  before  the 
goods  are  shipped.^  This  financial  relationship  is  one  of  import- 
ance to  the  farmer  himself,  for  he  is  anxious  to  receive  his  money 
when  his  produce  reaches  the  primary  shipping  point,  although 
this  point  may  be  separated  in  time  and  distance  a  long  way  and 
a  long  time  from  the  final  consumer.  Even  where  organization 
is  efficient  and  cooperative  selHng  well-nigh  perfected  among  the 
farmers,  as  in  the  case  of  the  Eastern  Shore  of  Virginia  Produce 
Exchange — 3,000  growers  selling  through  one  central  office — the 
banking  or  financial  aspect  of  marketing  is  held  to  be  of  more 
importance  than  the  so-called  ''direct  marketing."  This  farmers' 
company  does  not  market  direct  to  small  dealers  in  small  towns, 
near  large  distributing  centers,  but  markets  through  the  large 
regular  dealers,  who  in  turn  re-sell  to  the  smaller  cities.  Consider- 
ing financial  risks  involved  in  dealing  with  a  vast  number  of  dis- 
tant small  dealers,  the  added  expense  of  more  bookkeeping  and 
more  credit-rating  investigations,  it  is  cheapest  in  the  long  run 
to  deal  with  the  large  dealers  as  above  noted.  Since  the  large 
dealers  in  this  case  make  a  practice  of  buying  for  cash  f .o.b.  ship- 
ping station,  they  are  performing  a  very  real  service  of  a  financial 
nature.  Although  produce  is  shipped  into  forty  States  and  two 
foreign  countries,  the  grower  gets  his  pay  at  the  latest  within  ten 
days  of  delivering  his  produce  at  the  shipping  station. 

A  third  function  performed  by  many  speculative  middlemen  is 
that  of  warehousing  or  storing.  In  a  few  cases  at  the  present  time 
we  have  public  warehouses,  but  even  in  that  case  the  title  to  the 

^  The  most  conspicuous  and  extreme  case  of  this  credit  relationship  is 
that  furnished  by  the  old  cotton  "factor"  of  the  South,  who  advanced  part  of 
the  money  before  the  crop  was  planted.  This  was  clearly  an  awkward  and 
expensive  form  of  credit,  fitted  only  to  a  primitive  condition  of  agriculture. 


270  SPECULATION 

stored  goods  is  private,  and  consequently  the  speculative  risk 
remains.  Cooperative  organizations  of  farmers  frequently  erect 
warehouses,  and  thus  provide  storage  without  asking  this  service 
of  the  speculator.  There  is  an  increasing  number  of  farmers' 
organizations  that  provide  storage  and  pool  the  product  over  a 
period  of  time,  so  that  all  price  fluctuation — speculative  risks — 
are  distributed  among  those  using  the  organization.  But  the  fact 
remains  that  at  the  present  time  the  bulk  of  our  storage  facilities 
for  food  products  is  provided  by  speculators,  and  that  these  persons 
are  thereby  performing  a  necessary  social  service.  If  the  farmers 
can  perform  this  service  through  cooperative  organizations  in  a 
cheaper  and  better  manner,  and  thus  introduce  savings,  they  are 
at  liberty  to  do  so  and  ought  to  do  so. 

These  three  functions  of  the  speculator  in  food  products  hold 
true  for  both  organized  and  unorganized  speculation.  Unques- 
tionably the  great  bulk  of  speculation  in  the  United  States  is 
unorganized  speculation;  unquestionably  also  the  bulk  of  the 
pubHc  attention  and  discussion  of  speculation  centers  around 
organized  speculation,  the  lesser  of  the  two  forms.  This  is  due 
to  the  concentration  of  organized  speculation  in  a  few  great 
exchanges,  and  to  the  superficial  spectacularity  of  its  methods. 

Speculation  on  the  Organized  Exchanges. — Before  considering 
the  services  of  speculation  on  the  organized  exchanges,  it  is  well 
to  look  at  three  common  errors  in  the  public  mind  on  this  question. 
(1)  Does  speculation  cause  high  prices?  In  the  popular  mind  it 
does.  "Cornering  the  market" — a  form  of  speculation  now  prac- 
tically extinct  on  the  organized  exchanges — may  cause  a  temporary 
rise  in  price,  but  speculation  as  defined  in  this  chapter  does  not 
cause  high  prices.  (2)  Does  speculation  cause  low  prices?  Oddly 
enough,  speakers  who  accuse  speculation  of  causing  high  prices 
when  addressing  city  audiences,  will,  when  addressing  producers, 
make  the  claim  that  speculation  makes  low  prices.  The  super- 
ficial theory  here  seems  to  be  that  Mr.  A.  by  selling  short  one 
hundred  thousand  bushels  of  wheat  to  Mr.  B.  (wheat  that  A.  does 
not  at  the  moment  own)  thereby  depresses  the  market  by  this 
artificial  supply.  But  Mr.  B.  can  equally  well  say  that  by  buying 
this  wheat  he  has  thereby  created  a  demand,  strengthening  the 
market.  Obviously  the  amount  bought  equals  the  amount  sold. 
Speculation  on  the  organized  exchanges  does  not  cause  low  prices. 
(3)  Does  speculation  cause  prices  to  fluctuate?  Here  is  the  most 
persistent  fallacy  of  all,  the  most  widespread  confusion  of  cause 
and  effect.    The  one  and  only  reason  why  men  speculate  is  because 


PRICE  FLUCTUATIONS 


271 


prices  are  sure  to  fluctuate.  If  all  speculators  were  to  cease  activi- 
ties entirely,  or  were  to  become  an  extinct  species,  price  fluctua- 
tions would  continue.  For  instance,  the  price  of  United  States 
Government  bonds  fluctuates  from  day  to  day,  and  surely  no 
one  believes  speculators  are  trading  in  these  low-interest,  high 
grade  investment  securities.^  If  the  least  speculative  commodity 
in  the  world — a  United  States  Government  bond — fluctuates  in 
price  daily,  as  it  does,  it  is  clearly  evident  that  price  fluctuation 
IS  not  the  result  of  speculation.  Instead  of  causing  price  fluctua- 
tions, speculation  in  the  pit  tends  to  check  price  fluctuations. 
Speculation  in  the  pit  is  a  process  of  putting  on  brake,  checking 
a  rapid  rise  in  price  (a  ''bulge")  and  checking  a  rapid  fall  in 
price  (a  ''break").  As  evidence  of  this,  it  is  a  noteworthy  fact 
that  barley,  which  is  not  subject  to  future  trading  (pit  specula- 
tion), fluctuates  much  more  widely  in  price  than  does  either  wheat 
or  oats.  Wheat  and  oats  are  both  traded  in  the  pit;  both,  hke 
barley,  are  world-wide  crops,  grown  and  consumed  very  widely 
for  a  variety  of  purposes. 

Price  Fluctuations. — Taking  Chicago  Board  of  Trade  figures 
for  a  period  of  18  normal  years,  when  we  were  not  engaged  in 
any  war,  we  find  price  fluctuations  in  these  three  grains  (spot 
prices)  to  fluctuate  as  follows,  by  per  cents: 


Cash  Price  Fluctiuitions,  by  Per  Cents,  for  18  Years,  of  Wheat,  Barley,  and  Oats, 
Chicago — Showing  Widest  Flnctuati(ms  in  Barley. 

Year 

Wheat 

Barle 

y                    Oats 

1899 

24.2  per  cent 
42.6 

26.6  " 
41.0 

32.5        '• 
50.3 
59.2 

42.9        " 
71.8 

31.4  " 
61.2 

44.7  •• 
40.5 

43.5  " 
43.1        " 
70.1 
70.4        " 

207.3 

57.1  per 
97.6 

73.2  ' 

93.3  ' 
72.2 

103.3  ' 
57.1 
52.7 

175.0 
130.4 
91.9        ' 
114.3 
152.6        • 
233.3 

102.4  ' 
79.5 
87.5        ' 

120.6 

cent       46.7  per  cent 
'               25  0        " 

1900 

1901 

'              107  5       " 

1902. 

'              103  4        " 

1903 

44  0       " 

1904. . 

'                62  9        " 

1905 

'                38  0        " 

1906 

'                48  0        " 

1907 

'                68  6        " 

1908 

'               31  5        " 

1909. 

'               72  2        " 

1910 .       .  . 

64  7        " 

1911 

'                65  8        " 

1912 

'                93  4        " 

1913 

'                37  1        " 

1914 

'                52  6        " 

1915 

68  2        " 

1916.  . 

52.5 

From  the  above  table  it  will  be  observed  that  wheat  only  once 
showed  a  variation  in  price  in  any  one  year  of  over  100  per  cent. 


*  See  Appendix  to  this  chapter,  showing  fluctuations  in  prices  of  United 
States  Government  bonds. 


272  SPECULATION 

namely,  in  the  year  1916;  that  oats  showed  a  similar  variation 
but  twice,  namely,  in  the  years  1901  and  1902;  but  that  barley 
showed  such  a  price  variation  eight  times  in  eighteen  years,  namely, 
in  the  years  1904,  1907,  1908,  1910,  1911,  1912,  1913,  and  1916.^ 
Wide  price  fluctuations  are  thus  seen  to  be,  in  part,  prevented 
by  speculation.  Instead  of  the  wider  swings  of  the  market  which 
occur  yearly  in  barley,  oats  and  wheat  show  many  small-price 
fluctuations.  In  the  sense  that  speculation  prevents  wide  swings, 
it  stabiHzes  prices.  Since  speculation  is  carried  on  in  the  open 
market,  it  is,  in  a  very  true  sense  of  the  term,  a  great  auction 
market,  where  buyers  and  sellers  (of  grain  for  future  delivery) 
are  making  bids  and  offers,  and  hence  this  form  of  speculation  is  a 
correct  register  of  values — not  a  maker  of  values.  Supply  and 
demand  are  here  reflected,  each  instantly  manifesting  itself  either 
through  the  bids  or  the  offers,  and  hence  in  the  price.  Prices 
fluctuate  according  to  this  pressure  of  supply  or  demand.  The 
speculator  is  in  the  market  and  is  governed  by  these  forces — if 
he  survive  long  as  a  speculator.  And  his  speculations,  as  stated 
above,  tend  to  put  the  brake  on  both  bulges  and  slumps  in  the 
price.  The  many  small  fluctuations  in  price  in  oats,  wheat, 
and  corn  (on  the  future  market,  i.e.,  in  the  pit)  accompany 
trading  by  many  traders  at  small  profits  (or  losses)  on  each 
trade.  Where  there  are  no  organized  exchanges,  a  few  big 
traders  absorb  the  profits  or  losses  (bigger  profits  or  bigger  losses, 
and  bigger  margins). 

The  services  of  speculation  on  the  organized  exchanges  take 
three  principal  forms:  (1)  It  furnishes  a  wide  market.  The 
speculators  stand  ready,  any  hour  of  any  day,  to  take  any  trade 
regardless  of  the  size,  without  having  the  market  upset  by  the 
transaction.  This  was  amply  illustrated  during  the  World  War, 
when  the  Government  was  forced  to  place  order  for  large  quanti- 
ties of  oats  for  future  delivery.  Some  markets  could  not  receive 
an  order  for  300,000  bushels  of  oats,  without  having  the  price 
forced  up  unduly  thereby,  whereas  the  Chicago  pit,  by  reason  of 
its  heavy  speculative  trade,  was  able  to  absorb  orders  for  many 
hundreds  of  thousands  of  bushels  of  grain  without  causing  a  bulge 
in  price.  This  could  only  happen  in  a  wide  market.  And  now 
that  our  country  is  so  large,  such  a  wide  market  is  a  commercial 
convenience  of  great  value.     (2)  A  constant  market  is  afforded 

^  For  the  complete  price  table  on  barley,  see  Appendix  to  this  chapter. 
As  to  grades  of  grain  used  in  above  tabulations:  for  wheat  and  oats,  contract 
grades  are  used;  for  barley,  brewing  barley. 


SPECULATION  AND  THE  PUBLIC  INTEREST  273 

by  the  speculators.  For  instance  a  large  feeder  in  Texas  wires 
an  order  to  his  dealer  in  Kansas  City  for  200,000  bushels  of  oats, 
December  delivery.  The  order  is  accepted  and  placed  in  part 
in  the  Kansas  City  market — a  market  too  narrow  to  absorb 
instantly  such  a  big  order — and  in  part  in  the  Chicago  pit.  The 
first  seller  is  the  speculator,  ready  to  sell  at  any  instant,  at  his 
price.  Later  he  buys  back  from  a  dealer  who  is  interested  in 
handling  the  oats,  and  thus  the  speculator,  after  absorbing  the 
order,  passes  it  on  to  others  ready  to  take  it.  This  practice  keeps 
the  market  constantly  open  for  the  actual  commercial  needs  of  the 
country.  (3)  Wheat,  oats,  corn,  and  cotton  are  handled  at  a  lower 
margin  of  cost  because  they  are  hedged  in  the  pit.  The  risk  is 
shifted  to  the  speculator,  whose  choice  is  to  bear  the  risk,  with  the 
profit  or  loss  going  with  it. 

The  actual  mechanics  of  speculation  must  be  discussed  in  the 
chapter  dealing  with  the  grain  trade  (Chapter  XXII). 

3.  Speculation:  Its  Evils. — The  chief  evil  of  speculation,  par- 
ticularly on  the  organized  exchanges,  is  the  participation  therein 
by  the  unfit.  The  financially  unfit  constitute  the  bulk  of  this 
class  of  unfit  persons.  It  is  true  that  some  speculative  houses — 
an  increasing  number — carefully  scrutinize  the  record  of  each  cus- 
tomer and  would-be  customer,  to  determine  his  financial  ability 
to  speculate  and  stand  the  probable  losses.  A  few  houses  are 
lax  in  this.  Again,  some  persons  are  uiifit  to  speculate  by  reason 
of  the  position  of  trust  which  they  occupy,  such  as  bank  clerks, 
or  cashiers  in  banks.  These  should  be  rigidly  excluded  from  open- 
ing a  speculative  account  with  any  member  of  any  organized 
exchange.  No  member,  in  turn,  can  afford  to  enter  such  an  account 
on  his  ledger. 

The  cornering  of  the  market  is  sometimes  mentioned  as  one 
of  the  evils  of  speculation.  But  since  this  activity  is  strictly 
forbidden  by  the  rules  of  the  organized  exchanges,  it  cannot  in 
fairness  be  considered  as  a  part  of  the  activities  of  these  exchanges. 
It  is  an  activity  the  importance  of  which,  so  far  as  it  has  any,  is 
practically  confined  to  the  unorganized  markets. 

4.  Speculation  and  the  Public  Interest. — Under  our  present 
system  of  producing  crops  in  the  summer  time,  of  financing  them, 
of  storing  them,  and  of  consuming  them  during  twelve  months  of 
the  year,  speculation  is  an  inevitable  economic  necessity.  There- 
fore efforts  aiming  to  reform  or  abolish  speculations  should  be 
directed  towards  the  foundation  of  the  system,  namely,  the  system 
of   distributing,   warehousing   and   financing   those  products   in 

18 


274  '  SPECULATION 

which  most  speculation  occurs.  Perishable  crops,  such  as  fruits 
and  vegetables,  should  be  directed  by  the  organized  growers 
themselves  to  those  markets  that  are  not  already  glutted.  For 
instance,  consider  the  case  of  ripe  peaches.  Growers  in  New  York, 
Pennsylvania,  Ohio,  and  Maryland  ship  to  Pittsburgh,  which  is  a 
very  important  distributing  point  to  the  mining  towns  in  that 
region.  The  market  reports  show  that  Pittsburgh's  consuming 
capacity  is  about  15  carloads  of  peaches  a  day  in  the  peach  moving 
season.  But,  as  illustrating  market  glutting  by  shippers,  mention 
may  be  made  of  one  week's  record  recently  in  that  market.  The 
week's  receipts  ran  from  Monday  to  Friday  inclusive  on  the  nor- 
mal basis.  But  on  Saturday  78  cars  arrived.  Of  course  these 
cars  were  bought — by  speculators  (who  performed  thereby  an 
important  market  function) — but  the  glut  forced  the  price  down, 
not  the  speculators.  The  shipment  of  peaches  to  any  particular 
destination  lies  wholly  in  the  hands  of  the  shippers,  and  the  growers, 
if  they  are  not  suited  with  present  methods,  have  the  power  in 
their  own  hands  to  change  things.  They  have  the  liberty  and  the 
encouragement  to  organize  and  distribute  their  crop  where  specu- 
lative risks  will  be  greatly  reduced.  In  reaUty,  it  is  the  grower 
who  is  employing  the  speculator  to  market  his  fruits  and  vege- 
tables for  him,  in  cases  like  the  above,  and  hence  if  criticism  is 
due,  it  is  due  in  part  to  the  grower  himself. 

The  more  non-perishable  crops,  such  as  grains  and  cottons, 
must  be  stored  for  a  period  of  months,  and  in  some  cases  over  into 
the  next  crop  season,  before  they  enter  into  consumption.  This 
storage  problem  brings  with  it  the  credit  problem,  since  the 
grower  in  most  cases  must  have  his  money  when  he  parts  with  his 
crop.  In  many  cases  the  "middleman"  is  the  banker  for  the 
grower,  functioning  through  some  local  elevator,  merchant  or 
dealer.  But  in  any  event,  the  middleman  commonly  borrows 
from  the  big  money  markets  and  gets  the  money  to  the  point  of 
production — a  banking  function.  Fireproof  warehouses,  under 
private  management,  with  low  insurance  costs,  issuing  negotiable 
warehouse  receipts,  all  under  public  supervision  and  regulation, 
are  coming  into  general  use.  Under  the  Federal  Reserve  Banking 
system  the  use  of  trade  acceptances  is  likewise  growing  rapidly 
in  favor.  But  the  point  to  be  emphasized  here  is  that  a  solution 
of  the  warehousing  and  the  credit  problems  wall  go  far  towards 
solving  the  speculation  problem.  To  spend  time  denouncing 
speculation  and  speculators  is  about  as  futile  and  barren  an 
occupation  as  can  well  be  imagined,  unless  it  be  followed  with 


QUESTIONS  ON  THE  TEXT  275 

constructive  suggestions.  The  business  world  recognizes  that 
many  risks  cannot  be  ehminated  but  can  be  distributed,  as  is 
evidenced  by  fire  insurance,  rent  insurance,  habihty  insiu-ance, 
and  the  many  other  forms  of  insurance.  In  agriculture,  crop 
insurance,  hail  insurance,  live-stock  insurance,  and  the  other  forms 
of  agricultural  insurance  go  a  long  way  towards  distributing  the 
risks  of  production.  In  marketing,  however,  some  risks  and  some 
speculation  seem  difficult  to  distribute,  and  hence  remain  to  be 
shifted  to  the  shoulders  of  the  speculator. 

To  Sum  Up. — Gambling,  in  the  form  of  lotteries,  has  been  long 
since  outlawed  and  abolished.  Gambling  in  many  milder  forms 
is  falling  into  social  disrepute.  The  social  instinct  is  against  it. 
Unorganized  speculation  is  now  a  matter  of  public  clamor  and 
popular  concern.  It  is  a  symptom,  rather  than  a  fundamental 
condition.  But  ''the  people  hath  spoken,"  and  the  ban  of  dis- 
approval has  been  placed  on  some  forms  of  unorgam'zed  specula- 
tion but  not  on  others.  Confusion  exists.  No  sharp  definitions 
have  been  evolved.  The  farmers  themselves,  while  generally/  con- 
demning ''speculation  in  food  products,"  unblushingly  speculate 
in  the  land  itself.  And  the  land  question  is  more  fundamental 
and  more  serious  than  the  food  question.  Less  attention  should 
be  paid  to  speculation,  and  more  to  proper  distribution,  storage, 
and  credit.  As  to  organized  speculation,  it  is  working  out  its 
own  rules,  under  the  glare  of  publicity.  It  is  performing  an  eco- 
nomic function  which  should  be  continued  till  a  better  and  cheaper 
substitute  can  be  found.   Then  it  will  cease  to  be  a  "problem." 

QUESTIONS  ON  THE  TEXT 

1.  Cite  evidence  from  common  observation  that  important  words  are  often 

used  with  ambiguous  meaning. 

2.  Discuss  the  usage  and  meaning  of  the  following  terms:   hoarding;  corner- 

ing the  market;  cash  and  future  trading  and  speculation. 

3.  Distinguish  two  social  classes,  from  the  economic  standpoint. 

4.  To  which  class  was  the  founding  of  the  Plymouth  Colony  due?     Cite 

evidence  from  the  Charter  of  this  colony. 

5.  Formulate  a  principle  covering  the  right  to  speculate. 

6.  What  does  society  want  in  the  field  of  speculation? 

7.  Define  speculation.    Compare  the  dictionary  definition  with  the  ordinary 

economic  usage. 

8.  Is  the  retail  merchant  a  speculator? 

9.  Define  short  seller. 

10.  Is  the  farmer  a  speculator? 

11.  Define  gambhng.     Distinguish  from  speculation. 

12.  Compare  the  volume  of  future  trades  with  the  volume  of  bank  deposits, 

and  show  economic  significance. 

13.  Distinguish  two  kinds  of  speculation.    Illustrate  each. 

14.  In  which  form  do  most  frequent  abuses  occur? 


276  SPECULATION 

15.  What  role  is  played  by  butter  exchanges? 

16.  Comment  on  the  ethics  of  the  speculator. 

17.  What  are  the  ser\dces  of  speculation?    Three  functions. 

18.  Show,  by  the  case  of  the  Eastern  Shore  of  Virginia  Produce  Exchange, 

the  significance  of  the  banking  function  in  distribution. 

19.  The  bulk  of  speculation  in  the  United  States  is  of  what  kind? 

20.  Discuss  three  popular  fallacies  concerning  speculation  in  the  organized 

exchanges. 

21.  Compare  fluctuations  in  price  of  oats,  wheat  and  barley,  and  explain 

the  differences. 

22.  In  what  sense  is  it  true  that  future  trading  stabilizes  prices? 

23.  Show  the  three  chief  services  of  speculation  in  the  organized  exchanges. 

24.  What  are  the  evils  of  speculation? 

25.  What  is  being  done  now  to  reduce  these  evils? 

26.  Show  what  the  pubUc  interest  requires  in  the  matter  of  speculation. 

27.  Distinguish  clearly  between  fundamental  reforms  and  mere  treatment 

of  symptoms. 

28.  Summarize  the  main  points  of  the  chapter,  showing  the  problems  which 

underlie  speculation. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Should  prices  fluctuate,  or  should  they  be  "stabihzed  "?    Reasons  for  your 

beUef.  If  prices  are  stabihzed,  at  what  point  should  they  be  stabilized? 
And  by  what  authority?  Should  the  price  be  a  "just  price"  or  an 
"equihbrium  price"?  Define  "just  price."  Since  the  consumers  in 
the  United  States  have  a  majority  of  two  to  one  over  the  pro- 
ducers, price  fixing  by  governmental  authority  would  likely  be  shaped 
in  whose  interests? 

2.  Outhne  a  practicable  system  of  production,  warehousing,  financing,  and 

distribution  that  would  contain  the  minimum  of  speculation.  Would 
such  a  system  work  under  the  present  limitations  and  imperfections  of 
human  nature? 

REFERENCES 

1.  Anderson,  B.  M.,  Jr.:  "Grain  Speculation  and  Food  Control,"  Ths 
Annalist,  May  21,  1917,  pp.  689-690.  A  discussion  of  the  functions  of  specu- 
lation, with  particular  reference  to  the  grain  market. 

2.  "German  Law  Against  Exchange  Speculation."  In  Consular  Reports 
(Washington)  as  follows:  Vol.  52,  No.  194,  Nov.,  1896.  Vol.  62,  No.  235, 
April,  1900.    Vol.  64,  No.  243,  Aug.  28,  1900. 

3.  "Good  and  Evil  in  Speculation."  Industrial  Commission  Report 
(Washington)  as  follows:  Vol.  10,  pp.  xxxvii-lxiv,  p.  188.  Vol.  6,  pp.  89-224. 
Vol.  19,  pp.  185-186. 

4.  Haney,  Lewis  H.  (Editor):  "Studies  in  Agricultural  Economics." 
Bulletin  298.    University  of  Texas,  Austin,  October,  1913. 

5.  Hill,  John,  Jr.:    "Gold  Bricks  of  Speculation."    Chicago,  1904. 

6.  Rowland,  Harold  J.:  "Speculation  and  Gambling."  The  Independ- 
ent, New  York,  October  2,  1913,  pp.  15-18. 

7.  Pickell,  J.  Ralph:  "The  Problem  of  Food  Distribution,"  Rosenbaum 
Review,  Chicago,  April  14,  1917,  pp.  1-3. 

8.  Pickell,  J.  Ralph:  "Rural  Speculation."  Rosenbaum  Review,  Chicago, 
January  27,  1917,  pp.  1-2. 

9.  Price,  Theodore  H.:  "Short  SeUing  and  the  Speculator,"  Commerce 
and  Finance,  New  York,  November  20,  1918. 

10.  Price,  Theodore  H.:  "On  Licensing  Speculators,"  Commerce  and 
Finance,  New  York,  December  4,  1918. 


APPENDIX  277 

11.  "Wall  Street's  Fair  Price  Law" — A  Discussion  of  the  Use  and  Ethics 
of  Manipulation,  Conducted  in  a  New  and  Very  Open  Spirit  by  Members  of 
the  Stock  Exchange — The  Intent  Determines  the  Quahty  of  the  Act.  The 
Annalist,  New  York,  April  19,  1915,  p.  372. 

12.  "Why  we  Stopped  Buying  at  our  Elevators."  (Editorial).  The 
Saskatchewan  Cooperative  Elevator  News,  Regina,  June,  1917,  pp.  7-9. 

13.  Emery,  H.  C:  "Speculation  on  the  Stock  and  Produce  Exchanges 
of  the  United  States."    Columbia  University  Studies,  New  York,  1896. 

14.  ;    "Legislation  Against  Futures."    Political  Science  Quarterly, 

X,  62-86. 

15.  Stevens,  Albert  C:  "Futures  in  the  Wheat  Market."  Quarterly 
Journal  of  Economics,  II,  37-63. 

16.  "Speculation  on  the  Stock  Exchanges  and  Public  Regulation  of  the 
Exchanges,  Papers  and  Discussions  at  the  27th  Annual  Meeting  of  the  Ameri- 
can Economic  Association,  Princeton,  New  Jersey,  Dec,  1914."  Papers  by 
Samuel  C.  Untermyer  and  H.  C.  Emery:  Discussions  by  Albert  W.  Atwood, 
Walter  E.  Lagerguist,  A.  R.  Marsh,  Joseph  H.  Underwood,  Wm.  C.  Van 
Antwerp,  Wm.  Z.  Ripley.  American  Economic  Review,  Vol.  V,  24-111.  Same 
in  condensed  form,  in  Market  World  and  Chronicle  (New  York),  January  16, 
1915,  70-84. 

17.  Brace,  Harrison  H.:  "The  Value  of  Organized  Speculation," 
Boston,  1913. 

For  additional  references,  see  chapter  on  the  Grain  Trade. 

APPENDIX 
"  The  Charter  of  New  England — ^1620." — As  illustrating  the  interesting 
fact  that  "adventurers"  (speciilators)  founded  the  New  England  Colony  (the 
Plymouth  Colony)  and  sent  the  early  settlers  there,  the  following  extended  quo- 
tation is  given  from  the  original  King  James  Charter  of  1620. 

"James,  by  the  Grace  of  God,  King  of  England,  Scotland,  France,  and  Ireland,  De- 
fender of  the  Faith,  etc.,  to  all  whom  these  Presents  shall  come.  Greeting,  .  .  .  Whereas, 
since  that  Time,  upon  the  humble  Petition  of  the  said  Adventurers  of  the  said  first  CoUonye 
{i.e.,  London  Colony),  We  have  been  graciously  pleased  to  make  them  one  distinct  and 
entire  Body  by  themselves,  giving  unto  them  their  distinct  Lymitts  and  Bounds  .  .  .  Now 
forasmuch  as  We  have  been  in  like  Manner  humbly  petitioned  unto  by  our  trusty  and  well 
beloved  Servant,  Sir  Fferdinando  Gorges,  Knight,  Captain  of  our  ffort  and  Island  of  Ply- 
mouth of  the  said  Second  Collonye,  and  by  divers  other  Persons  of  Quality,  who  now  intend 
to  be  their  Associates,  divers  of  which  have  been  at  great  and  extraordinary  Charge,  and 
sustained  many  Losses  in  seeking  and  discovering  a  Place  fitt  and  convenient  to  lay  the 
Foundation  of  a  hopeful  Plantation  .  .  .  We  would  likewise  be  graciously  pleased  to  make 
certaine  Adventurers,  intending  to  erect  and  establish  flfishery.  Trade,  and  Plantation  within 
the  Territoryes,  Precincts,  and  Lymitts  of  the  said  second  Colony,  and  their  Successors, 
one  several  distinct  and  entire  Body,  and  to  grant  unto  them  such  Estate — Prvieliges — 
there,  as  in  these  our  Letters — Patent — expressed.  Divers  of  our  good  Subjects  .  .  . 
have  for  these  many  Years  past  frequented  those  Coasts  ...  In  Contemplacion  and  serious 
Consideracion  whereof.  Wee  have  thought  it  fitt  according  to  our  Kingly  Duty,  soe  much 
as  in  Us  lyeth,  to  second  and  follow  God's  sacred  Will,  rendering  reverend  Thanks  to  his 
Divine  Majestic  for  his  gracious  favour  in  laying  open  and  revealing  the  same  unto  us  before 
any  other  Christian  Prince  or  State,  by  which  Meanes  without  offence,  and  as  We  trust  to 
his  Glory  Wee  may  with  Boldness  goe  on  to  the  settling  of  soe  hopefull  a  Work,  which  tendeth 
to  the  reducing  and  Conversion  of  such  Savages  as  remaine  wandering  in  IDesolacion  and 
Distress,  to  Civil  Societie  and  Christian  Religion,  to  the  Inlargement  of  our  own  Dominions, 
and  the  Advancement  of  the  Fortunes  of  such  of  our  good  Subjects  as  shall  willingly  intresse 
themselves  in  the  said  Imployment,  to  whom  We  cannot  but  give  singular  Commendations 
for  their  soe  worthy  Intention  and  Enterprize." 

The  Hudson's  Bay  Company. — The  oldest  corporation  in  the  World  is  the 
Hudson's  Bay  Company.  It  was  chartered  in  1670  by  King  Charles  II,  under 
the  title  "Governor  and  Company  of  Adventurers  of  England,  Trading  into 
Hudson's  Bay." 

Thus  the  word  "adventurer"  was  once  used  to  denote  a  " speculator "  in 
the  better  sense  of  the  modern  term. 

Speculators  of  the  kind  named  in  the  two  cases  above  are  necessary  in 
society  in  order  to  have  any  social  progress. 


278 


SPECULATION 
Barley  Price  Ranges,  18  Years,  Chicago. 


Year 

IjOW 

High 

Range 

Per  cent 
of  fluctu- 
ation 

1899 

Cents 
35 
34 
38 
37 
36 
30 
35 
38 
40 
46 
43 
42 
55 
42 
42 
44 
48 
58 

Cents 

55 

67 

66 

73 

62 

61 

55 

58 
110 
106 

82K 

90 
139 
140 

85 

79 

90 
128 

Cents 

20 

33 

28 

36 

26 

31 

20 

20 

70 

60 

39  K 

48 

84 

98 

43 

35 

42 

70 

57  1 

1900                                                  

97  6 

1901 

73.2 

1902                                            

97  3 

1903 

72.2 

1904                                        

103  3 

1905 

57.1 

1906                                     

52.7 

1907 

175.0 

1908                       

130.4 

1909 

91.9 

1910                   

114.3 

1911 

152.6 

1912       

233.3 

1913                                                            .    .  .  • 

102  4 

1914       

79.5 

1915                                                                ■  •  .  • 

'  87  5 

1916       

120.6 

Fluctuations  in  Prices  of  United  States  Bonds. — "Since  November,  1916, 
the  2  per  cent  consols  have  declined  in  market  from  993^-100  to  96^  in  October, 
1917;  the  3s  of  1918  from  100^-101 1^  to  99-100;  the  4s  of  1925  from  110- 
llOM  to  105-1053^."  Vol.  1,  p.  7^.— Annual  Report  of  the  Comptroller  of  the 
Currency,  Washington,  Year  ending  October  31,  1917. 

Monthly  Range  in  Price  in  New  York,  Noifember,  1916  to  October,  1917. 


Date 


1916 


Coupon  bonds 

Registered 
bonds 

4'8  of  1925 

2's  of  1930 

Panama 
3'8  of  1961 

110    -llOM 

99K-  99K 

102     -102 

IIOK-IU 

99K-  99K 

102     -102 

liOK-liOM 

99K-  99 K 

101     -102 

109     -llOK 

99     -  99K 

99K-101 

108     -109 

99       -100;^ 

99K-101 

106     -108 

98     -  99 

95     -  99K 

105     -106 

96     -  98 

90     -  94 

104     -105M 

95 K-  98K 

80     -  90 

104K-105K 

96  H-  98  K 

80     -  80 

104K-105M 

96K-  96K 

80     -  80 

105H-105K 

96K-  96K 

80     -  80 

105     -lOb'A 

96K-  97K 

80     -  80 

November 

December 

1917 

January 

February 

March 

April 

May 

June 

July 

August 

September 

October 


(Vol.  2,  pp.  52,  53.) 


CHAPTER  XVIII 

THE  AGRICULTURAL  PRESS 

There  are  at  present  nearly  five  hundred  agricultural  papers 
in  the  United  States.  While  the  bulk  of  these  have  an  average 
circulation  of  fewer  than  one  hundred  thousand  copies,  yet  there 
are  about  fifty  papers  with  a  circulation  of  over  one  hundred 
thousand  each.  There  are  seven  farm  papers  with  an  average 
circulation  each  of  over  five  hundred  thousand.  It  is  obvious, 
therefore,  that  a  majority  of  the  farmers  read  at  least  one  agri- 
cultural paper,  and  many  of  them  more  than  one  paper. 

The  agricultural  press  is  now  a  highly  differentiated  institution, 
so  that  even  the  most  highly  speciaUzed  farm  interest  has  its 
organ.  For  instance,  not  merely  does  the  stock  grower  have  his 
paper,  but  there  is  a  particular  paper  for  a  particular  kind  of  stock, 
such  as  Holstein  cows  or  Percheron  horses.  Similarly,  with  the 
gi'owers  of  field  crops.  Not  only  are  there  hay  joiu*nals,  but 
journals  dealing  with  alfalfa.  However,  the  agricultural  press, 
considered  from  the  broader  standpoint,  is  made  up  not  merely 
of  these  specialized  journals  dealing  with  live  stock,  horticulture, 
bee  keeping,  etc.,  but  also  and  chiefly  of  that  type  of  farm  paper 
which  is  written  for  the  farmer's  entire  household. 

Point  of  View. — The  best  type  of  farm  paper  to-day  looks  on 
the  farmer  first  as  a  citizen.  Such  a  paper  is  nonpartisan  and 
nonsectarian.  Yet,  in  a  very  real  sense,  such  a  paper  is  much 
concerned  with  the  broader  political  and  reUgious  questions  of  the 
day.  The  farmer  is  regarded  first  of  all  as  interested  and  concerned 
wdth  the  civil,  social,  economic,  political,  educational  and  moral 
forces  about  him — the  general  questions  of  good  citizenship.  And 
in  the  second  place  the  farmer  is  looked  upon  as  interested  and 
concerned  about  good  farming.  A  careful  examination  of  a  num- 
ber of  our  largest  and  best  farm  papers  shows  that  their  editorial 
point  of  view  towards  farming  is,  first,  a  good  man,  and  second, 
a  good  farmer.^ 

Best  Type  of  Farm  Paper. — The  best  type  of  farm  paper  is  of 
course  that  one  which  best  serves  the  real  and  permanent  interests 
of  its  readers.  It  performs  a  real  service,  not  merely  to  the  farming 
''class"  but  also  to  the  State  and  nation.    It  has  a  deep  responsi- 

^  See  Appendix  to  this  chapter  for  different  viewpoint 

279 


280  THE  AGRICULTURAL  PRESS 

bility,  and  is  meeting  that  responsibility,  in  making  better  and 
more  prosperous  farmers  and  better  and  more  intelligent  citizens. 
The  paper  that  caters  in  a  narrow  sense  to  the  mere  economic 
needs  of  the  farming  class  is  not  the  best  type  of  farm  paper.  It 
is  a  mere  trade  paper.  Likewise  does  that  type  of  farm  paper  fail 
of  high  success  which  attempts  to  take  part,  in  a  partisan  way, 
with  the  momentary  and  passing  issues  of  politics.  The  best  type 
of  farm  paper — and  there  are  now  several  farm  papers  in  this 
class — is  performing  service  for  its  readers.  It  is  published  in  the 
heart  of  the  section  which  it  serves.  It  has  an  editorial  staff  large 
enough  and  able  enough  to  keep  in  contact  with  the  farmer  and 
the  farm  home.  Its  leading  articles  fit  local  conditions.  The 
individual  farmer  is  reached  and  helped.  The  farm  community 
receives  more  help  than  the  individual  farmer.  The  social  side 
of  rural  community  life  is  properly  evaluated  and  treated.  The 
significance  is  recognized  of  the  slogan  "Better  farming,  better 
business,  better  Uving."  This  type  of  paper  is  truly  a  household 
paper,  since  it  contains  departments  and  articles  of  interest  to 
each  member  of  the  farm  household.  A  maximum  number  of 
articles  appear  fresh  in  this  paper  and  a  minimum  number  are 
clipped  from  other  sources.  It  maintains  a  clear,  wholesome  moral 
tone.  The  farmer  prefers  this  tone  in  a  paper.^  The  advertising 
pages  of  this  type  of  paper  are  a  good  index  to  the  service  it  is 
rendering  its  readers.  No  patent  medicine  advertising  is  carried. 
No  financial  advertising  is  carried.  In  fact,  so  far  are  the  interests 
of  the  subscribers  protected  that  now  the  papers  of  this  type  are 
adopting  the  policy  of  guaranteeing  their  own  advertising.  In 
short,  these  papers  are  rendering  service  and  protection  of  a 
high  order  to  their  patrons.  They  are  rural  institutions  of 
first  importance. 

Worst  Type  of  Farm  Paper. — ^There  are  a  few  farm  papers 
scattered  over  the  country  that  apparently  have  not  taken  deep 
root  in  the  soil.  Their  editorial  staff  is  not  rural  minded.  Their 
contents  are  collected  mostly  by  the  scissors.  They  prostitute 
their  advertising  pages,  teaching  the  farmer  to  spend  his  money 
for  "cancer  cures,"  "rheumatism  cures,''  and  other  fake  remedies, 
as  well  as  for  brass  jewelry,  gimcracks,  gewgaws,  frauds,  shoddies 
and  other  bogus  merchandise.    These  papers  are  parasitic  in  their 

2  Agricultural  communities  were  the  first  to  vote  for  prohibition — of  the 
liquor  traffic — ^the  cities  the  last.  Farmers  look  upon  the  cities  as  being  some- 
what cynical  on  moral  and  religious  questions.  In  these  matters  the  farmers 
are  fundamentally  conservative. 


OTHER  TYPES  OF  FARM  PAPERS 


281 


nature,  taking  from  the  farm  community,  and  leaving  nothing 
or  less  than  nothing  in  return. 

Other  Types  of  Farm  Papers. — Very  few  farm  papers  attempt 
to  be  national  in  scope.  Yet  what  may  be  termed  the  national 
type  is  exemplified  by  the  Farm  Journal  of  Philadelphia.  Pub- 
Hshed  in  a  great  eastern  city,  this  paper  now  circulates  in  every 
State,  and  particularly  in  the  West  and  far  West.  Its  editorial 
staff  has  been  able  to  sense  those  questions  and  poHcies  which  are 
primarily  interesting  to  the  farmer  as  a  good  citizen ;  the  questions 
of  technical  farming — horticulture,  live  stock,  farm  crops,  market- 


FlG.  48. — Henry  Wallace,  founder  of 
Wallace's  Farmer. 


Fig.  49.— W.  D.  Hoard,  founder  of  Hoard's 
Dairyman. 


ing,  etc. — have  likewise  been  found  to  be  of  sufficiently  nation- 
wide interest  to  hold  the  readers.  Hence  this  somewhat  unique 
journal  has  prospered  and  grown  to  over  a  milhon  subscribers. 
Another  type  of  farm  paper  is  that  which  reflects  the  outstanding 
personality  of  one  man.  In  such  cases  the  original  foimder  has 
been  a  man  of  power  and  significance  in  the  farming  world — a 
real  agricultural  statesman.  Two  familiar  examples  of  this  are 
the  papers  founded  by  Henry  Wallace  (Fig.  48)  of  Iowa  and  W.  D. 
Hoard  (Fig.  49)  of  Wisconsin.^  Each  of  the  papers  founded  by 
these  two  men  became  an  institution  in  its  community  and  in  the 

3  Wallace 's  Farmer,  Des  Moines,  Iowa.    Hoard's  Dairyman,  Ft.  Atkin- 
son, Wisconsin. 


282  THE  AGRICULTURAL  PRESS 

nation,  and  each  paper  reflected  the  fineness  of  mind  and  the  clean, 
wholesome  constructive  personality  of  its  founder. 

The  Specialized  Farm  Paper. — The  differentiation  of  the  farm 
press,  as  mentioned  above,  has  been  carried  to  a  very  high  degree. 
No  sooner  does  a  specialized  farming  interest  develop,  apparently, 
than  a  paper  is  organized  to  meet  that  need.  As  an  example  of 
this  fact  the  case  of  the  Lake  Erie  grape  belt  may  be  mentioned. 
Grape  culture  was  instituted  here  and  finally  spread  to  an  area 
some  three  miles  wide  and  sixty  or  seventy  miles  long.  At  once 
there  was  established  the  paper  to  fit  this  industry,  ''The  Grape 
Belt"  by  name,  and  it  continues  to  reflect  faithfully  conditions 
in  that  small  district.  Thus  the  farmer  interested  in  pigeons, 
bees,  any  breed  of  poultry  or  live  stock,  any  kind  of  tame  hay  or 
field  crop,  any  kind  of  fruit  or  berry,  or  any  social  aspect  of  rural 
life,  will  be  able  to  find  a  paper  to  suit  his  needs. 

The  Country  Weeklies. — The  country  weekly  newspaper,  up 
to  recent  date,  has  taken  its  color  and  ideals  largely  from  the  city 
press.  It  has  aimed  to  furnish  the  farmer  primarily  and  frankly 
a  political  newspaper,  with  all  the  advantages  and  limitations  of 
that  aim.  In  other  words,  it  considered  the  farmer  as  first,  last 
and  all  the  time  a  voter  and  a  partisan.  His  class  interest  as  a 
farmer  was  not  recognized,  in  most  cases.  However,  in  late  years, 
due  chiefly  to  the  county  agricultural  agent  movement,  a  change 
has  come  over  the  wide-awake  country  weekly.  The  interests  of 
permanent  agriculture  begin  to  give  color  to  the  paper.  A  "  literary 
revolution"  is  taking  place  in  the  editorial  make-up  of  these  papers. 
Since  these  papers  are  published  in  every  rural  community,  and 
literally  go  back  to  the  grass  roots,  the  significance  for  good  of 
this  revolution  is  hard  to  measure. 

Agricultural  Press  and  Scientific  Fanning. — ^The  agricultural 
press  forms  the  most  important  mediimi  between  the  farmer  on 
the  one  hand,  and  on  the  other  hand  the  United  States  Department 
of  Agi-iculture,  the  State  Departments  of  Agriculture,  the  State 
Agricultural  Colleges  and  State  and  Federal  Experiment  Stations. 
Scientific  bulletins  are  translated  into  the  language  of  the  farmer. 
And  conversely  successful  practices  worked  out  and  applied  by 
individual  farmers,  are  examined  and  described  by  the  agricultural 
press  so  that  aU  farmers  may  be  acquainted  with  what  each 
successful  farmer  is  doing. 

Agricultural  Publishers  Association. — The  agricultural  press 
has  developed  an  organization  of  its  own  known  as  the  Agricultural 
Publishers  Association.    It  is  hoped  that  one  effect  of  this  organiza- 


APPENDIX  283 

tion  will  be  to  raise  the  standard  of  those  agricultural  papers  that 
are  not  serving  their  community  until  they  approach  the  high 
type  of  service  rendered  by  the  best  class  of  farm  papers. 

QUESTIONS  ON  THE  TEXT 

1.  How  many  agricultural  papers  are  published  in  the  United  States? 

2.  How  many  of  these  have  over  100,000  circulation?     How  many  over 

500,000  ?     How  many  over  1,000,000  ? 

3.  Discuss  the  differentiation  of  the  agricultural  press. 

4.  Discuss  the  point  of  view  of  our  agricultural  press.     Cite  a  case  of  the 

opposite  view. 

5.  Describe  the  best  type  of  farm  paper. 

6.  Describe  the  worst  type  of  farm  paper. 

7.  Describe  and  illustrate  some  outstanding,  individual  types. 

8.  Show  to  what  extent  the  specialized  farm  paper  has  been  developed. 

9.  Comment  on  the  country  weeklies. 

10.  Show  the  relation  of  the  agricultural  press  to  scientific  farming. 

11.  What  is  the  Agricultural  PubUshers  Association? 

12.  Arrange  in  proper  rank  a  list  of  the  States  having  the  largest  number  of 

agricultural  papers. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Secure  copies  of  farm  papers  of  different  classes,  and  compare  them  as  to 

their  relative  merits.  Include  in  this  study  the  following  points:  edi- 
torial pohcy;  amount  and  character  of  advertising;  amount  of  original 
matter  and  amount  of  reprint;  appearance  of  paper;  departments; 
moral  tone. 

2.  Make  a  similar  study  of  some  representative  country  weeklies. 

REFERENCES 

1.  Advertising  and  SeUing  Magazine,  95  Madison  Ave.,  New  York  City. 
Publishes  an  annual  directory  of  farm  papers. 

2.  Tucker,   Gilbert  M.:      "American  Agricultural  Periodicals."     An 
Historical  Sketch.    Privately  printed.    Albany,  New  York,  1909. 

APPENDIX 

The  Agricultural  Press  of  the  United  States. — The  following  is  a  partial 
list  of  farm  papers  of  100,000  circulation  and  over,  for  the  year  1916. 

1.  1,000,000  circulation  and  over. 

Pennsylvania.     Farm  Journal,  1,085,000,  Philadelphia. 

2.  500,000  to  1,000,000. 

Iowa.    Successful  Farming,  788,000,  Des  Moines. 
Kansas.     Missouri  Valley  Weekly,  501,000,  Topeka. 
Kansas.     Household,  777,000,  Topeka. 
Massachusetts.     Farm  and  Home,  686,000,  Springfield. 
Minnesota.     Farmers  Wife,  757,000,  St.  Paul. 
Ohio.     Farm  and  Fireside,  631,000,  Springfield. 

3.  300,000  to  500,000. 

Illinois.     American  Fruit  Grower,  300,000,  Chicago. 

Ilhnois.     Better  Farming,  324,000,  Chicago. 

Indiana.     Farm  Life,  405,000,  Spencer. 

Minnesota.    Rural  Weekly,  309,000,  St.  Paul. 

Missouri.    Kansas  City  Weekly  St-ar,  350,000,  Kansas  City. 

Ohio.     Farm  News,  387,000,  Springfield. 

Pennsylvania.     Country  Gentleman,  324,000,  Philadelphia. 

4.  100,000  to  300,000. 

Alabama.     Progressive  Farmer,  206,000,  Birmingham. 
Colorado.     Great  Divide,  104,000,  Denver. 
Georgia.     Smithern  Ruralist,  272,000,  Atlanta. 
Illinois.     American  Farming,  200,000,  Chicago. 
Illinois.    Orange  Judd  Farmer,  153,000,  Chicago. 


284  THE  AGRICULTURAL  PRESS 

Illinois.    Prairie  Farmer,  104,000,  Chicago. 

Illinois.     Farming  Business,  103, dOO,  Chicago. 

Illinois.     Farmer's  Review,  105,000,  Chicago. 

Illinois.     The  Breeder's  Gazette,  100,000,  Chicago. 

Indiana.     Up-to-date  Farming,  191, CKX),  Indianapolis. 

Iowa.     Kimball's  Dairy  Farmer,  184,0Ci0,  Waterloo. 

Iowa.    Iowa  Homestead,  156,000,  Des  Moines. 

Iowa.     Wallace's  Farmer,  100,000,  Des  Moines. 

Kansas.     Farmer's  Mail  and  Breeze,  112,000,  Topeka. 

Kansas.     Capper's  Weekly,  257,000,  Topeka. 

Kentucky.    Inland  Farmer,  129,000,  Louisville. 

Michigan.    Gleaner  and  Business  Farmer,  101,000,  Detroit. 

Minnesota.     Farm,  Stock  and  Home,  138,000,  Minneapolis. 

Minnesota.    Farmer's  Dispatch,  104,000,  Minneapolis. 

Minnesota.    Northwest  Farmstead,  112,000,  Minneapolis. 

Minnesota.    American  Home  Weekly,  269,000,  St.  Paul. 

Minnesota.     The  Farmer,  142,000,  St.  Paul. 

Missouri.     Farmer  and  Stockman,  107,000,  Kansas  City. 

Missouri.     Missouri  and  Kansas  Farmer,  112,000,  Kansas  City. 

Missouri.    Journal  of  Agriculture,  154,00)0,  St.  Louis. 

Missouri.    National  Farmer  and  Stock  Grower,  150,000,  St.  Louis. 

Missouri.     Kansas  City  Weekly  Journal,     261,000,  Kansas  City. 

Nebraska.     Nebraska  Farm  Journal,  103,000,  Omaha. 

Nebraska.     Twentieth  Century  Farmer,  111,000,  Omaha. 

New  York.    American  Agriculturist,  131,000,  New  York. 

New  York.    Rural  New-Yorker,  172,000,  New  York. 

Ohio.    Ohio  Farmer,  136,000,  Cleveland. 

Oklahoma.    Oklahoma  Farmer  and  Stockman,  113,000,  Oklahoma  City. 

Pennsylvania.     National  Stockman  and  Farmer,  140,000,  Pittsburgh. 

South  Dakota.     Dakota  Farmer,  100,000,  Aberdeen. 

Tennessee.     Southern  Agriculturist,  153,000,  Nashville. 

Wisconsin.     Hoard's  Dairyman,  100,000,  Ft.  Atkinson. 

Reliable  Advertising  Only. — Group  of  six  farm  papers  printing  following 
guarantee:  ''We  positively  guarantee  that  each  advertiser  in  this  issue  is 
reliable.  We  agree  to  refund  to  any  subscriber  the  purchase  price  of  any 
article  advertised  herein  if  found  to  be  not  as  advertised." 

Farm  and  Home,  Springfield,  Mass.,  and  Chicago,  111. 

Northwest  Farmstead,  Minneapohs,  Minn. 

Orange  Judd  Farmer,  Chicago,  111. 

American  Agriculturist,  New  York  City. 

New  England  Homestead,  Springfield,  Mass. 

Dakota  Farmer,  Aberdeen,  S.  D. 

Two  Policies  in  Editing  a  Farm  Paper. — (1)  Give  the  farmers  what  they 
want;  (2)  Give  the  farmers  what  they  need. 

Farm  papers  roughly  fall  into  two  groups,  as  classified  in  the  above  heading. 
As  illustrating  group  No.  1 — "giving  the  farmers  what  they  want" — the  fol- 
lowing quotation  may  be  given  from  an  editorial  in  the  June  1,  1919,  issue  of  a 
prominent  farm  journal: 

"In  short,  my  idea  (of  editorial  policy)  is  to  find  what  the  farmers  want  and  then  help 
them  get  it.  I  regard  (name  of  paper)  as  being  in  the  position  of  an  attorney  for  the  farmers 
and  that  all  public  questions  should  be  considered  from  the  standpoint  of  the  farmers,  and 
every  effort  made  to  have  them  answered,  so  that  the  best  interests,  both  economic  and  social, 
of  the  farmers  shall  be  served." 

A  different  view  is  expressed  in  the  following  quotation  from  a  successful 
editor: 

"Just  what  is  a  farm  paper?  Judging  from  the  letters  received  at  the  editor's  desk,  it 
ranges  all  the  way  from  a  class  sheet  that  praises  everybody  connected  directly  with  farming 
and  damns  everybody  else,  to  a  paper  that  gathers  its  ideas  and  ideals  with  the  scissors  and 
assembles  them  with  the  paste  pot.  Now  our  idea  of  a  farm  paper  has  been  in  process  of 
growth  some  thirty  odd  years,  and  is  still  growing.  It  cannot  all  be  expressed  in  a  paragraph, 
but  here  is  one  point  to  consider.  The  farm  paper  that  is  of  real  service  to  the  farmer  is 
one  that  seeks  at  all  times  to  find  the  facts  and  tell  the  truth.  In  order  to  serve  its  farmer 
readers  well  it  must  have  more  than  a  class  vision.  It  must  deal  directly  and  fairly  with 
those  problems  that  relate  to  the  well  being  of  farming  and  not  of  farming  alone,  but  of 
State  and  national  life  as  well.  We  cannot  get  away  from  our  neighbors,  and  our  neighbors 
constitute  all  the  rest  of  the  folks  in  the  country.  We  cannot  do  without  them  any  more 
than  they  can  do  without  us.  Tolerance  and  charity  and  good-will  are  essential  elements 
of  growing  successful  farm  management  because  good-will  and  charity  and  tolerance  make 
for  neighborhood  and  national  life  and  happiness." — Hugh  J.  Hughes. 


CHAPTER  XIX 

FARMERS'  ORGANIZATIONS 

In  February,  1919,  fifty  bankers,  delegated  by  37  State  Bankers' 
Associations  in  thirty-seven  States,  were  in  session  in  Washington, 
D.  C,  with  the  heads  of  the  United  States  Department  of  Agri- 
culture, the  Farm  Loan  Board,  and  the  Bureau  of  Education, 
mapping  out  a  program  for  agricultural  development,  better  rural 
education  and  the  general  improvement  of  rural  social  conditions. 
There  was  no  farmer  present  delegated  to  voice  the  farmers'  views 
or  state  their  wishes.  This  case  is  typical.  Many  efforts  have 
been  made  to  ''uplift"  the  farmer  without  consulting  the  farmer. 
This  distinguished  gathering  in  Washington  represented  a  very 
large  share  of  the  wealth  and  the  brains  of  the  United  States,  and 
very  able  leadership.  A  very  comprehensive  program  for  improv- 
ing rural  life  was  adopted.  This  program  was  next  offered,  ready- 
made,  to  the  farmers.  Whose  fault  was  it  that  farmers  were  not 
directly  represented  at  this  conference  and  at  many  other  similar 
conferences  devoted  to  the  serious  and  worthy  cause  "of  improving 
rural  conditions?  The  farmers  themselves  are  to  blame.  Lack 
of  organization  among  the  farmers  explains  it.  Bankers'  organiza- 
tions in  37  States  were  directly  represented.  There  was  no  one 
organization  of  farmers  covering  37  States.  There  are  many  differ- 
ent organizations  of  farmers  in  all  the  States,  but  thus  far  they  have 
not  federated  or  coordinated  their  efforts  or  mobilized  their  forces. 

Means  of  Securing  Benefits. — Farmers'  organizations  have  two 
general  means  of  securing  benefits  for  themselves,  through  self- 
help  and  through  State  aid. 

President  Wilson,  in  addressing  the  fiftieth  annual  session  of 
the  National  Grange,  commended  the  Grange  for  following  the 
principle  of  ''self-help."  It  is  a  significant  fact  that  the  Grange 
has  followed  the  principle  of  self-help,  and  that  it  is  the  sole 
survivor  of  fifty  years'  standing  of  the  many  national  farmers' 
organizations  in  the  United  States.  Those  organizations  which 
have  worked  on  the  principle  of  State  aid — except  State  aid  as  a 
temporary  means  towards  self-help — have  succumbed. 

Class  Organization. — The  comment  is  frequently  made  that 
our  various  economic  classes  are  all  well  organized,  except  the 
farmer.  Thus,  it  is  said,  the  manufacturers  have  their  organiza- 
tions; the  wholesalers  theirs;  the  jobbers  theirs;  the  commission 

285 


286  FARMERS'  ORGANIZATIONS 

merchants  theirs;  the  credit  men  theirs;  the  bankers  theirs;  and 
so  on,  and  that  these  various  interests  in  any  one  city  are  united 
into  a  local  Chamber  of  Commerce,  and  these  local  chambers 
are  federated  into  one  grand  central  organization  at  Washington 
known  as  the  Chamber  of  Commerce  of  the  United  States.  Simi- 
larly, the  comment  is  heard  that  various  trades  or  crafts  of  laboring 
men  are  organized  into  unions,  and  that  these  large  unions  are 
federated  into  one  grand  central  organization,  the  American 
Federation  of  Labor,  also  with  headquarters  at  Washington.  The 
farmer  is  commonly  spoken  of  as  individualistic,  as  inarticulate  as  a 
class,  without  voice  and  without  protection.  In  a  superficial  sense 
of  the  word  these  comments  are  all  true.  The  farmers  are  slow 
in  forming  any  one  great  national  federation  of  farmers'  organ- 
izations comparable  with  those  of  labor  or  capital.  But  neither 
does  the  American  Federation  of  Labor  comprise  all  the  great 
labor  unions  of  the  country.  Neither  do  all  so-called  ''capitahst" 
enterprises  come  within  the  purview  of  the  Chamber  of  Commerce 
of  the  United  States.  At  the  present  stage  of  economic  develop- 
ment, organized  capital  and  organized  labor  are  able  to  mobilize 
their  forces  quickly  and  effectively,  while  the  farmers  can  mobilize 
themselves  but  slowly  and  with  indifferent  success.^ 

Difficulty  of  Classifjdng  Farmers*  Organizations. — A  logical 
classification  of  farmers'  organizations  is  desirable,  but  difficult  to 
make.  This  is  true,  whether  the  discussion  be  of  the  living  organ- 
izations or  the  dead  ones  of  the  past.  Among  living  organizations 
which  ones,  for  instance,  are  doing  most  for  their  communities? 
Two  representative  farm  papers,  one  in  the  Pacific  Northwest, 

1  As  a  typical  example  of  strong  organization  and  effective  mobilization, 
take  the  following  case  of  the  National  Association  of  Credit  Men,  an  Asso- 
ciation of  25,000  members: 

"The  Association  Acts  in  an  Emergency. — The  adaptability  and  facility  with  which  the 
National  Association  of  Credit  Men,  because  of  its  peculiar  composition,  can  act  in  a  threat- 
ening situation  was  well  illustrated  during  the  last  fortnight.  A  strike  of  the  fire  fighting 
forces  of  the  city  of  Cleveland  had  lett  it  with  practically  no  fire  department  protection. 
The  National  office  was  seen  by  leading  insurance  interests  in  New  York,  and  their  position 
explained — that,  of  course,  a  seriously  increased  hazard  not  contemplated  in  the  policies 
covering  property  in  Cleveland  had  been  injected  by  the  strike,  that  it  was  not  a  matter 
of  rates,  but  that  the  companies  were  in  no  position  to  risk  the  chance  of  a  small  fire  starting 
in  the  congested  district  of  the  city  becoming  a  conflagration.  Hence  they  would  have 
to  withdraw. 

"The  National  office  asked  if  time  could  be  had  to  communicate  with  the  Cleveland 
Association  of  Credit  Men.  This  was  readily  granted,  and  President  Klingman  fully  in- 
formed by  wire.  In  a  few  hours  the  National  office  was  informed  that  the  officers  and 
directors  of  the  Cleveland  Association  had  met  certain  city  officials,  and  it  was  felt  that 
within  seventy-two  hours  conditions  would  be  righted. 

"This  reply  was  communicated  to  the  insurance  interests,  which  said  that  no  adverse 
action  would  be  taken  pending  deliberations. 

"Within  forty-eight  hours  President  Klingman  had  wired  that  the  mayor  had  arranged 
for  the  return  of  the  fire  department  force,  and  that  the  city  at  that  moment  had  had  restored 
the  normal  fire  protection.  The  insurance  companies  were  immediately  notified  and  ex- 
pressed their  sincere  appreciation." — From  General  Letter  No.  8,  Feb.  1,  1919,  Natiojial 
Association  of  Credit  Men,  to  Members. 


THE  FARMERS'  NATIONAL  HEADQUARTERS  287 

one  in  the  Mississippi  Valley,  made  extensive  inquiries  in  this 
field,  and  drew  from  theirreaders  many  interesting  replies.^  Readers 
in  the  Pacific  Northwest  named  various  organizations,  including 
among  others  the  following:  the  Grange;  Farmers'  Educational  and 
Cooperative  Union;  village  and  city  Commercial  Clubs;  Fruit 
Growers'  Associations;  local  church;  organizations  within  local 
churches.  The  paper  in  the  Mississippi  Valley  conducted  a 
^'Country  Life  Betterment"  contest,  offering  substantial  prizes  for 
the  best  articles  written  on  the  subject.  The  five  winning  contest- 
ants named  the  followdng  organizations:  A  Farmers'  Club  in 
Montana;  A  Community  Club  in  Wisconsin;  A  Ladies'  Auxiliary 
Society  of  a  Farmers'  Club  in  Michigan;  A  County  Improvement 
Association  in  Iowa;  A  Farmers'  Cooperative  Creamery  in  Minne- 
sota. Honorable  mention  was  also  given  to  a  church  congregation 
in  Minnesota,  and  a  Town  and  Country  Community  Club  in  New 
York.  The  above  lists  include  two  national  farmers'  organizations 
— the  Grange  and  the  Farmers'  Union — and  a  great  many  purely 
local  farmers'  organizations.  For  the  purposes  of  this  chapter 
li\dng  farmers'  organizations  are  first  classified  as  local,  national, 
and  federation. 

1.  Federation  of  Farm  Organizations. — Many  efforts  have 
been  made  to  federate  the  farmers.  The  most  popular  plan  has 
been  to  establish  at  Washington  a  central  headquarters  located 
in  a  Temple  of  Agriculture.  And  now  that  the  American  Federa- 
tion of  Labor  is  occupying  its  own  Labor  Temple  the  idea  has 
gained  more  potency.  As  evidence  of  the  growing  popularity  of  a 
national  federation  of  agriculture,  ten  recent  efforts  may  be  named, 
although  only  three  may  be  discussed  in  any  detail:  (1)  National 
Agricultural  Society;  (2)  National  Chamber  of  Agriculture  Com- 
mission; (3)  National  Chamber  of  Agriculture;  (4)  American  Agri- 
cultural Association;  (5)  National  Agricultural  Association;  (6) 
National  Agricultural  Organization  Society.  This  last  is  a  frank 
attempt  to  transplant  Sir  Horace  Plunkett's  Irish  Agricultural 
Organization  Society  bodily  in  American  soil.  Hence  its  slowness 
in  taking  root;  (7)  National  Milk  Producers'  Federation;  (8) 
Farmers'  National  Headquarters;  (9)  National  Board  of  Farm 
Organizations;  (10)  American  Federation  of  Farm  Bureaus.  The 
last  three  ^vill  be  considered  in  turn. 

(a)  The  Farmers'  National  Headquarters. — In  the  year  1910 
a  group  of  farmers,  coming  from  a  number  of  State  farmers'  organ- 

2  The  papers  referred  to  are  The  Washington  Farmer,  Spokane;  and  The 
Farm,  Stock  and  Home,  Minneapolis. 


288  FARMERS*  ORGANIZATIONS 

izations  of  somewhat  progressive  or  radical  tendencies,  met  in 
Conference  in  Washington,  and  decided  upon  a  plan  of  national 
federation.    Their  widely  circulated  prospectus  announced: 

''The  end  kept  steadily  in  view  is  a  Temple  of  Agriculture  as 
the  National  home  of  the  associated  farm  organizations,  thus 
providing  for  the  fitting  representation  of  the  great  foundation 
industry  of  agriculture  at  the  nation's  capital." 

The  Conference  decided  in  favor  of  establishing  a  Farmer's 
National  Headquarters  in  Washington.  One  plank  in  the  plat- 
form adopted  there  read  as  follows: 

"To  establish  National  Headquarters  at  Washington,  to  include  every- 
thing needed  to  enable  farmers  to  keep  a  close  watch  on  how  theie*  business 
is  attended  to  by  Congress  and  the  Departments.  Such  headquarters  are 
needed  not  only  to  attend  to  the  farmers'  interests  and  to  insure  their  securing 
a  square  deal,  but  they  are  needed  to  give  the  right  support  to  the  Representa- 
tives in  Congress  who  actively  support  the  farmers'  program,  and  as  a  clearing 
house  for  all  who  desire  to  cooperate  with  the  organized  progressive  farmers 
in  pubHc  welfare  work.  We  appeal  to  all  farmers  and  all  other  pubhc-spirited 
citizens,  to  assist  in  making  this  effort  to  establish  a  people's  legislative  clearing 
house  a  success." 

The  purpose  and  scope  of  this  federation's  work  are  clearly 
foreshadowed  in  the  plank  and  prospectus  quoted  above.  Officers 
are  maintained  at  the  capital,  in  charge  of  a  permanent  manager. 
An  official  organ  is  issued.^  The  chief  activity  is  in  the  legislative 
field — to  promote  desired  legislation,  to  oppose  undesired  legisla- 
tion. Among  measures  supported  in  the  past  are  these:  Parcels 
Post;  Direct  election  of  United  States  Senators;  Federal  Farm 
Loan  Act.  Among  pending  measures  for  which  this  federation  is 
now  working  are  these:  Government  owned  and  operated  mer- 
chant marine;  Government  ownership  and  operation  of  the  rail- 
roads; Government  ownership  and  operation  of  natural  resources 
now  in  private  hands.  The  method  of  work  by  this  federation 
consists  largely  in  two  things — in  conferences  and  in  farmers' 
national  committees.  Conferences  bring  together  representatives 
from  organizations  specifically  concerned  in  pending  govern- 
mental policies.  Farmers'  National  Committees  likewise  rep- 
resent these  same  organized  farm  interests,  and  thus  form  a 
temporary  subfederation.  In  this  sense  the  Farmers'  National 
Headquarters  becomes  the  joint  Washington  office  of  various  active 
farm  organizations.  In  some  cases  the  affiliation  is  temporary — 
while  the  emergency  lasts;  in  other  cases  a  definite  relationship 
is  established.  The  published  fist  of  farm  organizations  having 
their  Washington  offices  in  the  Farmers  National  Headquarters 

*  The  Farmers'  Open  Forum,  Washington,  SI. 00  a  year. 


AMERICAN  FEDERATION  OF  FARM  BUREAUS  289 

includes  the  following:  Farmers'  National  Legislative  Council; 
American  Society  of  Equity;  The  Gleaners;  The  National  Dairy 
Union;  National  Creamery  Butter  Makers  Association;  American 
Association  of  Creamery  Butter  Manufacturers;  Rural  Credit 
League  of  America;  the  Postal  Express  Federation. 

(b)  The  National  Board  of  Farm  Organizations. — This  Feder- 
ation was  formed  in  Washington  in  1917.  It  is  laboring  to  secure 
a  Temple  of  Agriculture  in  Washington,  as  the  home  of  the  organ- 
ization. Conferences  are  held  from  time  to  time;  policies  are 
formulated  and  adopted;  propaganda  for  or  against  legislative 
measures  is  carried  on.  Advice  is  given  to  the  president  of  the 
United  States  on  matters  concerning  the  farmers'  welfare.  Pro- 
tection is  given  to  the  farmeis'  interests.  The  published  list  of 
affiliated  societies  includes  the  following:  (1)  Farmers'  Educational 
and  Cooperative  Union  of  America  (generally  known  as  the 
Farmers'  Union);  (2)  National  Council  of  Farmers'  Cooperative 
Associations;  (3)  National  Dairy  Union;  (4)  Pennsylvania  Rural 
Progress  Association;  (5)  National  Agricultural  Organization 
Society;  (6)  National  Conference  on  Marketing  and  Farm  Credit 
(which  pet  in  Chicago  in  1914,  1915,  and  1916) ;  (7)  Farmers' 
National  Congress;  (8)  National  Milk  Producers'  Federation;  (9) 
Federation  of  JeAvish  Farmers  of  America;  (10)  Farmers'  Society 
of  Equity.  Of  the  above  ten  organizations  not  all  are  active.  And 
the  American  Society  of  Equity,  as  a  national  body,  is  not  affiliated 
with  the  above  federation.  These  two  federations  of  farmers — 
Farmers'  National  Headquarters  and  the  National  Board  of  Farm 
Organizations — are  both  located  in  Washington,  but  they  do  not 
work  together.  Both  represent  very  earnest  attempts  to  organize 
a  federation  from  the  top  down.  It  is  a  very  difficult  matter  to 
organize  a  federation  of  farmers  from  the  ground  up — from  the 
individual  farmer,  through  his  local  unit,  up  through  the  State 
body  into  a  national  federation  or  council,  following  the  example 
of  the  political  organization  of  our  government.  The  County 
Agent  movement,  with  its  supporting  Farm  Bureau,  prepared  the 
way  for  such  a  democratic  organization. 

(c)  American  Federation  of  Farm  Bureaus. — A  separate  chap- 
ter (XXI)  is  reserved  for  a  discussion  of  the  County  Agent  move- 
ment, and  in  that  chapter  the  County  Farm  Bureau  is  described 
as  the  organization  of  farmers  within  the  county  which  has  imme- 
diate charge  of  the  County  Agents'  work.  The  Farm  Bureau, 
therefore,  may  be  briefly  described  here,  in  anticipation,  as  a 
voluntary  organization  of  individual  farmers,  supported  by  the 

19 


290 


FARMERS'  ORGANIZATIONS 


annual  membership  dues  of  these  farmers.  These  membership 
fees  vary  in  different  States,  from  one  dollar  a  year  to  ten  dollars 
a  year  per  member.  The  organization  is  clearly  one  of  farmers, 
by  farmers  and  for  farmers,  free  from  undue  domination  by  any 
outside  interests,  governmental,  commercial  or  otherwise.  As 
these  local  county  units  became  strong,  it  was  a  logical  step  to 
federate  the  county  units  within  a  State  into  a  State  Federation 
of  Farm  Bureaus.  By  the  beginning  of  the  year  1919  the  following 
18  States  had   such  State  Federations:      California,   Colorado, 

Delaware,  Idaho,  Illinois,  Iowa, 
Massachusetts,  Michigan,  Mis- 
souri, Montana,  Nebraska,  New 
Hampshire,  New  York,  Ohio, 
Pennsylvania,  South  Dakota, 
Vermont,  West  Virginia.  Clearly, 
the  next  logical  step  was  to  unite 
the  State  federations  into  a 
National  Federation  of  Farm 
Bureaus.  This  was  done  in  the 
year  1919  under  the  presidency  of 
J.  R.  Howard  of  Iowa  (Fig.  50). 
Then  for  the  first  time,  agricul- 
ture as  a  single  great  industry, 
became  organized,  mobilized, 
provided  with  a  voice  in  national 
affairs.  In  this  organization  the 
farmers  have  a  means  of  formu- 
lating and  announcing  policies; 
they  have  the  machinery  for 
formulating  demands  for  legislation;  they  have  an  institution  which 
will  encourage  them  to  organize  for  the  study  of  educational,  eco- 
nomic,social,and  political  problems;  they  have  constituted  amedium 
through  which  the  membership  may  act  collectively.  They  are  on 
a  par  with  so-called  ''organized  labor"  and  "organized  capital." 
2.  National  Farmers*  Organizations. — It  is  not  the  purpose  of 
this  chapter  to  give  an  encyclopedic  list  of  all  farmers'  national 
organizations,  for  their  number  is  too  great  for  that.  Only  a 
few  are  named  here,  and  only  one  is  discussed  in  detail,  the  oldest 
one  being  selected  for  that  purpose.  Among  the  national  organiza- 
tions which  have  survived  a  period  of  ten  years  and  over  may  be 
listed  these  larger  ones :  Farmers'  Union,  Equity  Union,  American 
Society  of  Equity,  The  Gleaners,  and  the  Grange. 


_  pi 

ident  of  the  American  Federation  of  Ft 
Bureaus. 


NATIONAL  FARMERS'  ORGANIZATIONS 


291 


The  Grange. — The  Grange  is  to-day  a  powerful  organization  of 
farmers,  active  in  thirty-three  States,  with  its  own  press,  its  own 
body  of  organizers,  its  own  lecturers,  its  own  literature,  poems, 
music,  and  traditions.  The  story  of  its  rise  to  power,  its  decline,  its 
new  growth,  and  its  achievements  forms  an  interesting  chapter  in 
the  annals  of  rural  life.  Perhaps  no  other  organization  ever  showed 
such  rapid  changes  from  prosperity  to  depression  and  back  to  pros- 
perity, such  rapid  shifts  in  the  geographical  territory  it  occupied. 
A  glance  at  the  table  below  illustrates  in  a  measure  these  two  points 
— a  shifting  from  the  South  to  the  North;  a  decline  in  organization 
in  some  States  and  a  growth  in  organization  in  other  States. 

Grange  States  (States  Having  State  Granges) 


State  granges 

in  1875 

bulk  in  the  South 

State  granges 

in  1917 

bulk  in  the  North 

Grange 
Grange 

Grange 
Grange 

Grange 
Grange 
Grange 
Grange 
Grange 
Grange 

Grange 

Grange 
Grange 
Grange 
Grange 

Grange 
Grange 

Grange 

Grange 

Grange 

Grange 
Grange 

Grange 
Grange 

Grange 
Grange 

Arizona 

California 

Grange 
Grange 
Grange 
Grange 

Connecticut 

Floricia 



Idaho 

Grange 
Grange 
Grange 
Grange 
Grange 
Grange 

Illinois 

Iowa .... 

Kentucky 

Maine 

Grange 
Grange 
Grange 
Grange 
Grange 

Massachusetts 

Minnesota 

Mississippi.  . 

Grange 
Grange 
Grange 

Montana  . 

Nebraska 

Nevada 

Grange 
Grange 

New  Jersey 

New  York 

Grange 

North  Carolina 

North  Dakota 

Grange 
Grange 
Grange 
Grange 
Grange 
Grange 

Ohio 

Oregon 

Pennsylvania . 

Rhode  Island 

South  Carolina 

South  Dakota 

Grange 

Tennessee 

Texas 

Utah 

Vermont 

Grange 

Washington 

Grange 
Grange 
Grange 
Grange 

West  Virginia 

Wyoming 

292 


FARMERS'  ORGANIZATIONS 


The  Grange  as  a&  institution  is  the  lengthened  shadow  of  one 
man,  Oliver  H.  Kelley,  of  Washington,  D.  C.  At  the  close  of  the 
Civil  War,  Mr.  Kelley  was  sent  by  the  Commissioner  of  Agricnl- 
tm-e  on  a  long  torn-  through  the  unhappy  Southern  States,  to  study 
and  report  on  the  destruction  and  reconstruction  of  Southern 
agriculture.  The  human  side  of  the  study  made  the  deepest 
appeal  to  his  imagination.  It  was  a  question  of  the  farmer  rather 
than  farming  that  seemed  to  him  to  need  first  attention.  The 
rancor  of  sectionalism,  the  bitterness  of  defeat,  the  helplessness  of 


Fig.  51. — Home  of  the  first  local  grange  organized  in  the  United  States,  Fredonia,  N.  Y. 

the  situation  all  rankled  in  the  breast  of  the  southern  farmer. 
Mr.  Kelley,  being  a  loyal  Mason,  conceived  the  idea  of  a  secret 
society  with  a  beautiful  and  symbolic  ritual  as  a  means  of  restoring 
a  fraternal  feeling  among  the  farmers  north  and  south.  It  was  his 
niece,  Miss  Carohne  A.  Hall,  of  Boston,  who  gave  him  the  idea  of 
having  the  new  secret  order  include  women  as  well  as  men.  After 
some  two  years  of  study  and  consultation  with  intimate  friends, 
Mr.  Kelley  in  1868  organized  his  new  order,  the  Patrons  of  Hus- 
bandry. It  was  organized  at  the  top  first,  namely,  the  national 
Grange,  as  the  central  unit  was  called.  The  order  was  to  have 
three  subdivisions,  namely,  State  Granges,  County  Granges  (or 
*'Pomonas")  and  Subordinate  Granges.  It  required  the  heroic 
faith  and  work  of  Mr.  Kelley  about  two  years  to  make  any  head- 


THE  GRANGE  AS  AN  INSTITUTION 


293 


way  with  the  new  order.  The  first  subordinate  Grange  was  estab- 
lished at  Fredonia,  New  York,  in  1868,  by  Mr.  Kelley  himself 
(Fig.  51).  Subordinate  Granges  were  next  started  in  Minnesota, 
Illinois,  Indiana,  Ohio  and  Tennessee.  From  Grange  No.  1  comes 
S.  J.  Lowell,  present  master  of  the  National  Grange  (Fig.  52). 

It  is  well  to  pause  here  and  enquire  what  were  the  real  purposes 
of  the  Grange  when  it  was  organized.  Since  pohtics  and  rehgion 
were  ruled  out  as  subjects  for  discussion,  these  may  be  omitted 
from  consideration.  Rereading 
this  early  Grange  history  in  the 
light  of  the  present  it  is  evident 
that  the  original  purposes  were 
not  sharply  defined  in  any  one's 
mind,  and  were  not  set  down  in 
hard-and-fast  rules.  It  is  also 
evident  that  while  Mr.  Kelley 
was  a  practical  man,  yet  he  was 
actuated  by  lofty  and  idealistic 
views  of  economic,  mental,  moral, 
and  spiritual  blessings  for  the 
farmers.  Apparently  the  spirit- 
ual blessings  rather  than  the 
material  were  uppermost  in  his 
mind,  and  being  a  practical  man, 
doubtless  his  views  were  not  the 

same    from    year     to     year     or    in    Fig.  52.— S.  J.  Lowell,  a  farmer  of  Fredonia, 

state  after  State  which  he  visited.  liTuI^l^'  sta'Jl^Grangl:  ""Sir  of"  til 
Time  and  place  changed  them.  It  ^^*^°"^^  ^'^"«^- 

is  only  fair  to  let  Mr.  Kelley  speak  for  himself  here,  so  the  follow- 
ing quotation  is  introduced  from  his  early  writings : 

"September  4,  1867:  I  have  traveled  some  in  our  glorious  country — for  it 
still  exists  as  God  made  it,  not^vithstanding  the  poUtical  troubles.  I  have 
noticed  particularly  those  engaged  in  cultivating  the  soil  who  comprise  the 
bulk  of  the  population,  and  among  these  are  noble  minds,  rough  diamonds,  that 
only  need  the  polishing  wheel  of  education  to  show  their  real  value.  Agricul- 
tural papers  and  works  of  art  are  doing  much  good  among  those  who  will  read 
and  think.  Agricultural  fairs  have  accomphshed  much;  but  these  come  but 
once  a  year,  and  while  being  advertised,  create  an  interest;  but  as  soon  as  they 
are  over  the  interest  is  gone.  Now  what  I  design  is  this:  An  Order  that  will 
create  an  interest  and  keep  it  up.  .  .  .  Among  the  objects  in  view  may  be 
mentioned  a  cordial  and  social  fraternity  of  the  farmers  all  over  the  country. 
Encourage  them  to  read  and  think;  to  plant  fruiis  and  flowers;  beautify  their 
homes;  elevate  them;  make  them  progressive.  It  will  increase  the  subscrip- 
tions to  the  agricultural  papers." 


294  FARMERS'  ORGANIZATIONS 

In  another  letter  he  shows  the  poHcy  toward  young  people. 

"  Bring  up  the  boys  and  girls,  and  as  fast  as  they  prove  by  good  behavior 
and  abihty  that  they  are  worthy  of  advancenient,  give  them  a  higher  degree. 
It  will  stimulate  them  to  be  temperate,  studious,  and  good.  They  will  feel 
they  are  respected.  Every  organization  will  be  provided  with  a  library,  and 
from  that  they  can  have  books  to  impregnate  their  minds  with  sound  sense 
...  I  hope  we  can  inaugurate  an  Order  that  will  elevate  our  occupation  as 
farmers,  so  that  it  will  be  a  work  of  credit,  not  onlv  to  be  a  member  of  it,  but 
also  make  it  an  honor  to  be  a  cultivator  of  the  soil." 

Somewhat  similar  views  are  expressed  by  other  prominent 
members  of  the  order.  For  instance,  L.  McKinstry,  charter  mem- 
ber of  Fredonia  Grange  (No.  1)  and  its  first  Lecturer,  in  his  address 
of  welcome  to  O.  H.  Kelley  (25th  Anniversary  of  Fredonia  Grange, 
1893)  said: 

'•But  in  my  estimation.  Brother  Kelley,  the  Order  you  founded  has  had  a 
higher  value  than  in  the  line  of  material  interests.  It  has  served  to  stimulate 
and  improve  the  social  side  of  farm  life.  The  social,  parliamentary  and  hterary 
education  that  has  been  gained  in  the  Grange  has  brightened  the  life  of  many  a 
family  that  would  have  otherwise  led  a  lonely  existence." 

The  rapid  growth  of  the  Grange,  after  the  first  three  years  of 
hard  pulling,  was  beyond  the  fondest  expectations  of  its  best 
friends.  The  years  1873,  1874,  and  1875  are  the  banner  years  in 
Grange  history — the  climax  coming  in  1875,  reaching  a  member- 
ship of  one  and  a  half  million.  For  instance,  in  the  year  1868,  ten 
dispensations  had  been  issued;  in  1869,  thirty-six;  in  1870,  one 
hundred  and  thirty-four.  In  February  and  March  1874,  four 
thousand  dispensations  were  issued.  Granges  were  springing  up 
all  over  the  country,  like  mushrooms  in  the  night.  Not  only  among 
farmers,  but  also  in  villages  and  cities,  Granges  were  being  formed 
the  members  claiming  to  be  ''interested  in  agricultural  pursuits." 
Three  thousand  organizers  were  in  the  field  in  1874.  During  these 
three  banner  years  the  moneys  received  at  the  Secretary's  office 
amounted  to  $350,000.  This  made  the  Order  financially  strong. 
Miss  Hall  compiled  a  song  book  for  the  Order  for  which  she  was 
given  $1,000  by  the  National  Grange.  The  Grange  showed  tre- 
mendous strength  at  this  time  in  the  States  of  Kansas,  Missouri, 
Iowa,  Illinois,  Indiana,  Kentucky,  Ohio.  There  is  clearly  a  con- 
nection here  between  the  growth  of  the  Grange  and  the  economic 
depression  sweeping  the  country  at  this  time.  It  is  true  that  the 
panic  of  1873  was  both  industrial  and  agricultural.  But  the  agri- 
cultural depression  was  more  deep-seated  and  more  enduring  than 
the  financial  and  industrial  crisis.  The  West,  after  the  Civil  War, 
had  been  too  rapidly  settled.    Aided  by  a  huge  government  sub- 


A  DECLINE  295 

sidy,  the  Union  Pacific  Railroad  had  been  completed  across  a 

thousand  miles  of  desert  to  the  Pacific  coast;  the  Northern  Pacific, 

aided  by  a  land  grant  the  size  of  a  small  kingdom,  had  pushed  on 

over  the  trackless  prairies,  across  the  Missouri  river  in  Dakota. 

This  wholesale  bribery  of  railroads  to  build  where  they  were  not 

needed  was  matched  by  giving  to  each  new  settler  who  was  bold 

enough  to  pioneer  a  farm  of  virgin  soil  as  rich  as  the  world  has  ever 

known.    So  the  roads  brought  in  settlers  and  the  settlers  brought 

in  new  roads.    Then  came  the  spectacle  of  overproduction  of  food, 

or,  more  correctly  stated,  more  food  was  produced  than  existing 

marketing  machinery  could  distribute  widely,  and  the  settlers 

began  to  sell  food  below  the  cost  of  production.     Cheap  food, 

cheap  land,  but  dear  money  was  the  settler's  lot.    Much  capital 

was  needed  to  open  up  the  new  country.    Interest  rates  were  high. 

Mortgages  were  hard  to  pay  off.    Cheap  food  from  the  west  was 

a  blow  to  eastern  agriculture  also.     The  whole  experiment  in 

promoted  development  collapsed.    The  railroads  went  bankrupt. 

The  farmers  had  their  mortgages  foreclosed.    Many  of  them  left 

the  country.    In  1872  corn  reached  the  low  price  of  twenty-seven 

cents  a  bushel  on  the  Chicago  Board  of  Trade.    This  meant  ten 

cent  corn  on  the  farm.    Wheat  in  1874  reached  the  low  point  of 

seventy-eight  cents  in  Chicago,  a  point  not  reached  again  till  ten 

years  later.    Many  farmers  saw  in  the  Grange  a  chance  to  bring 

about  economic  reforms,  not  realizing  the  fundamental  nature  of 

their  distress.    It  was  at  this  time  that  Secretary  Kelley  reported 

to  the  National  Grange  as  follows: 

''The  educational  and  social  features  of  our  Order  offer  inducements  to 
some  to  join,  but  the  majority  desire  pecuniary  benefits — advantages  in  pur- 
chase of  machinery  and  sales  of  produce.  To  bring  all  the  Granges  into  direct 
communication  and  to  devise  a  system  of  cooperation,  devolves  upon  the 
National  Grange.  But  until  its  membership  is  much  increased,  we  must  wait 
patiently  the  appearance  of  our  new  Moses,  who  is  to  present  the  coveted  plan." 

A  DecUne. — Following  1875  came  a  rapid  decline  of  the  Grange. 
It  had  reached  and  passed  the  first  peak  of  its  power.  At  a  stormy 
meeting  of  the  National  Grange  at  Charleston  a  measure  was 
parsed  for  the  distribution  of  the  surplus  revenue  among  the  sub- 
ordinate Granges.  Thus  this  large  fund  was  dissipated,  an  insig- 
nificant amount  going  to  each  local  Grange.  When  the  Grange 
had  manifested  its  strength,  politicians  and  others,  seeking  only 
the  loaves  and  fishes,  hastened  to  join.  Too  many  non-farmers 
had  joined.  Two  Granges  were  organized  in  New  York  City, 
one  the  ''Manhattan"  on  Broadway,  with  a  membership  of  45 
wholesale  dealers,  sewing  machine  manufacturers,  etc.,  represent- 


296  FARMERS'  ORGANIZATIONS 

ing  many  millions  of  capital;  the  other  was  the  ''Knickerbocker.'' 
Boston  has  a  similar  Grange,  which  after  much  trouble  was  expelled 
from  the  National.  Members  of  these  city  Granges  were  criticized 
as  being  interested  in  the  farmer  ''as  the  hawk  is  interested  in  the 
sparrow."  In  1876  four  thousand  Granges  were  reported  dehn- 
quent.  Salaries  were  at  once  reduced — the  Master's  from  $2,000 
to  $1,200,  and  the  Secretary's  from  $2,500  to  $2,000.  In  1879  the 
Master's  salary  was  dropped  entirely,  and  the  secretary  reduced 
to  $600. 

Renewed  Growth. — ^And  now  there  began  a  new  period  of 
rapid  growth.  Some  writers  had  reported  the  Grange  as  "dead." 
But  it  suddenly  found  new  life,  especially  in  the  North  and  the 
East — particularly  New  England — and  later  in  the  Northwest. 
At  the  session  of  the  National  Grange  in  1885,  held  at  Boston, 
delegates  were  present  from  all  the  States  and  territories  but  eight! 
Such  were  the  vicissitudes  of  ten  years!  Granges,  dormant  for 
many  years,  were  resuscitated.  New  Granges  were  organized. 
During  the  whole  life  of  the  Grange  it  has  thus  evinced  an  almost 
incredible  power  to  grow  weak  and  become  dormant  and  then 
suddenly  to  rise  again  into  full  might  and  activity.  Evidently  it 
contains  the  germs  of  life.  It  is  now  proper  to  pause  and  enquire 
into  the  economic  aspects  of  Grange  endeavor  and  also  into  its 
substantial  achievements. 

Economic  Program  of  the  Grange. — What  are  commonly  called 
the  "Granger  laws"  had  no  connection  with  the  Grange.  The 
so-called  Granger  legislation  was  railway  legislation  enacted  by 
the  separate  States  in  the  days  before  we  had  any  federal  Inter- 
state Commerce  Commission  or  federal  regulation  of  the  railroads. 
The  States  in  the  corn  belt  accordingly  undertook  to  regulate  the 
rates  and  services  of  these  roads,  and  the  roads  in  turn  resisted 
all  such  regulation.  The  movement  began  in  Illinois,  in  the  Con- 
stitution of  1870  and  the  railway  regulation  Act  of  1871.  Other 
States  now  followed.  The  farmers  back  of  this  movement  were 
considered  radicals,  and  came  to  be  commonly  called  "grangers," 
the  term  not  indicating  any  connection  with  any  Grange.  These 
laws  constituted  "granger  legislation,"  but  not  Grange  legislation. 
There  are  at  least  three  bits  of  evidence  for  this  statement.  (1) 
The  date  of  the  laws.  The  Illinois  constitution  of  1870 — the 
pattern  for  all  the  rest — ^was  adopted  in  1870,  after  a  few  years  of 
agitation,  and  the  Grange  at  that  time  had  not  a  foothold  in  the 
State.  The  State  Grange  of  Illinois  was  organized  in  March,  1872. 
By  1874  seven  States  had  enacted  "Granger  laws."    (2)  The  per- 


ECONOMIC  PROGRAM  OF  THE  GRANGE       297 

sonnel  of  the  movement.  In  Illinois  the  real  organ  of  agitation  was 
the  "State  Farmers'  Association,"  composed  of  local  ''Farmers' 
Clubs."  Its  President,  W.  C.  Flagg,  testified  in  1873  before  the 
Windom  Committee  that  he  was  not  a  member  of  the  Grange  and 
that  his  organization  was  an  open,  political  one,  not  like  the 
Grange,  a  secret  non-political  one.  (3)  Grange  principles.  The 
official  declaration  of  purposes  of  the  Grange,  adopted  in  1874 
at  St.  Louis,  states  that  the  Grange  is  not  hostile  to  railroads.  In 
1875  a  resolution  from  Texas  favoring  raih-oad  legislation  was 
suppressed.  Congressman  D.  W.  Aiken  of  South  Carolina,  long 
a  member  of  the  Grange  National  Executive  Committee,  said  in 
an  address,  ''There  existed  in  Illinois  and  Wisconsin  and  other 
sections  of  the  Northwest  agricultural  clubs  whose  province  seemed 
to  be  to  wage  war  against  transportation  companies.  Anathemas 
were  hurled  upon  the  Grange  for  making  this  attack,  whereas 
every  Patron  of  Husbandry  knows  that  the  Grange  as  such  was 
not  a  participant  in  the  fight  from  beginning  to  end." 

.  However,  whoever  the  farmers  were  that  started  the  railroad 
reform  legislation,  the  Grange  did  quite  early  become  drawn  into 
various  economic  movements.  Mr.  Kelley  thought  he  was  start- 
ing a  social  and  educational  movement.  Hard  times  in  the  West, 
hard  times  in  the  East,  low  prices  of  farm  products,  soon  caused  the 
original  purpose  of  the  Grange  to  be  overshadowed  by  the  cooper- 
ative, anti-middleman  feature.  It  was  this  feature  which  caused 
the  tremendous  growth  of  the  Grange  from  1870  to  1875,  and 
almost  threatened  to  transform  the  farmers  into  a  race  of  mer- 
chants and  traders,'*  As  soon  as  the  more  radical  Granges  of  the 
West  got  control  of  the  National  Grange  a  movement  was  started 
to  make  of  it  a  gigantic  cooperative  scheme,  with  three  national 
purchasing  agents,  one  at  New  York,  one  at  Chicago,  and  one  at 
New  Orleans.  This  scheme  was  dropped  as  impracticable.  Then 
came  a  period  of  the  buying  of  patent  rights  to  manufacture  vari- 
ous machines,  such  as  harvesters,  mowers,  reapers,  etc.  The 
Executive  Committee  expressed  the  theory  of  it  in  these  words: 
"  To  secure  rights  to  manufacture  leading  implements  .  .  .  is  pre- 
eminently a  duty  of  the  National  Grange,  and  a  measure  of  the 

^  An  amusing  incident  occurred  in  connection  with  a  General  Business 
Purchasing  Agent  appointed  by  the  Minnesota  State  Grange.  The  Secretary 
of  the  Minnesota  State  Grange  wrote  a  letter  to  Mr.  Kelley  in  Washington, 
informing  him  officially  that  the  first  purchasing  order  had  reached  St.  Paul, 
the  order  being  for  the  purchase  of  a  jackass.  Mr.  Kelley  wrpte  on  this  letter 
the  following  memorandum :  "  This  purchasing  business  commenced  with  buy- 
ing jackasses;  the  prospects  are  that  many  will  be  sold." 


298  '   FARMERS'  ORGANIZATIONS 

greatest  importance,  directly,  because  the  profits  of  manufacture 
will  thus  be  controlled  by  the  Order,  as  well  as  the  profits  of  trans- 
fer or  dealing;  indirectly,  by  securing  facilities  that  will  favor  the 
introduction  of  manufacturing  establishments  in  districts  at 
present  far  removed  from  them,  and  where  their  products  are  in 
demand."  The  theory  of  having  the  farmers'  machinery  manu- 
factured at  his  door  was  an  alluring  one.  And  to  divert  the 
"profits"  of  the  manufacturer  into  the  pockets  of  the  farmer  was 
then,  and  it  is  now,  the  subject  of  many  a  naive  scheme  to  *'do 
something  for  the  farmer." 

Interest  in  Cooperation. — It  was  into  cooperative  enterprises 
of  buying  and  selling,  however,  that  the  Grange  was  most  actively 
drawn  at  this  period.  The  craze  for  cooperation  has  indeed  been 
compared  to  the  craze  for  gold  in  1849.  The  National  Grange 
adopted  the  policy  of  promoting  cooperation  after  the  model  of 
the  English  Rochdale  system.  An  envoy  was  sent  to  England  to 
study  the  question  and  confer  with  British  cooperators.  A  large 
plan  was  conceived,  whereby  the  Grange  was  to  raise  a  capital 
fund  of  $125,000  for  building  shipping  depots,  and  a  Grange 
Company,  called  the  ''Anglo-American  Cooperative  Company" 
was  to  carry  on  trade  directly  with  England.  Three  English  com- 
missioners visited  America  and  investigated  the  plan,  and  decided 
to  erect  their  otvh  warehouses  at  four  seaboard  cities.  They  were 
to  furnish  clothing  and  other  manufactured  goods  at  ten  per  cent 
discount,  and  were  to  buy  farm  produce  at  market  price  from  the 
Grange,  provided  the  Grange  would  concentrate  its  purchases 
through  them.  But  a  volume  of  business  large  enough  to  justify 
the  venture  could  not  be  guaranteed,  and  the  project  was  dropped. 
In  the  various  States  village  cooperative  stores  were  now  quite 
extensively  started,  although  the  Rochdale  plan  was  not  very 
faithfully  adhered  to,  particularly  that  feature  of  the  English  plan 
which  distributes  surplus  earnings  on  the  basis  of  patronage  and 
not  on  the  basis  of  capital.  It  is  somewhat  difficult  to  state  the 
net  gain  derived  by  Grange  members  from  all  their  many  ventures, 
for  substantially  all  of  them  were  short-lived.  In  Iowa  a  purchas- 
ing agent  bought  plows  and  reapers  for  the  local  Granges,  effecting 
a  savings  thereby  in  one  year  of  fifty  thousand  dollars,  according 
to  Grange  figures.  If  this  lowered  the  prices  of  implement  dealers 
who  were  taking  too  wide  a  margin,  it  was  a  permanent  benefit  to 
the  Grange.  If,  however,  it  served  to  put  out  of  business  entirely 
many  local  dealers,  thus  making  repairs  difficult  to  secure,  it  was 
a  loss  rather  than  a  gain  in  the  end.    At  this  distance,  it  is  not  easy 


ACHIEVEMENTS  OF  THE  GRANGE  299 

to  know  all  the  facts.  In  New  York  a  State  bu3dng  agency  was 
established  and  later  abandoned;  then  district  agencies  were  tried, 
making  certain  savings  to  the  buyers,  these,  however,  were  also 
given  up  after  a  few  years,  and  purchases  were  made  through 
regular  dealers.  If  the  cold-blooded  test  of  dividends  be  applied 
to  these  experiments,  they  were  all  failures.  If,  on  the  other  hand, 
they  be  looked  on  as  mere  laboratories  or  experiment  stations  in 
marketing,  and  in  part  also  as  a  potential  club  over  the  head  of  the 
over-mercenary  middlemen,  then  these  experiments  were  worth 
while.  They  may  be  considered  in  the  light  of  "potential  compe- 
tition" which  put  a  brake  on  high  prices.  In  1876  the  Patrons 
were  reported  to  own  five  steamboat  or  packet  lines,  twenty-two 
warehouses,  and  thirty-two  grain  elevators  in  the  Chicago  territory 
— principally  in  Iowa.  In  some  cases  State  Granges  financed  these 
enterprises,  having  funds  with  which  to  experiment. 

Effect  of  Low  Prices. — The  economic  crisis  through  which  the 
country  passed  in  1893  and  1894,  and  the  agricultural  depression 
extending  well  up  into  1897  very  naturally  caused  many  farmers 
to  turn  to  the  Grange,  as  they  had  done  in  the  70's  as  a  possible 
solution  for  their  economic  ills.  Corn  in  Chicago,  for  instance,  in 
1895  touched  the  low  point  of  25  cents  a  bushel,  and  in  1896  the 
final  bottom  of  22^/2  cents !  This  meant  10  cent  corn  on  the  farms — 
a  price  much  below  cost  of  production.  Wheat  in  Chicago  reached 
52^^  cents  in  1894  and  53^  cents  in  1895,  which  meant  40 
cent  wheat  on  the  farms,  a  price  below  cost  of  production. 
No  wonder  the  State  Granges  of  California,  Oregon,  Illinois, 
Washington,  Missouri,  Virginia,  and  Pennsylvania  sent  a  speaker 
to  Washington  to  present  a  memorial  to  Congress  setting  forth 
the  evils  of  the  existing  protective  tariff  sj^stem  and  asking  for 
protection  to  agriculture  in  the  form  of  export  bounties.^  No 
''help"  was  given. 

Achievements  of  the  Grange. — The  Grange  has  always  taken 
part  in  working  for  agrarian  legislation  which  it  wanted  and  fighting 
legislation  which  it  did  not  want.  It  has  unquestionably  opposed 
with  success  much  pending  legislation  potentially  harmful  to 
farmers.  The  creation  of  the  present  Department  of  Agriculture 
is  probably  due  more  to  the  Grange  than  to  any  other  influence. 
The  rural  free  delivery  of  mail  is  largely  also  a  Grange  achievement. 
The  Grange  also  has  to  its  credit  a  long  list  of  constructive  and 
important  acts  concerning  education,  parcel  post,  the  correct  label- 
ing of  foods  and  drugs,  etc. 

^  54  Cong.  2  Sess.  Senate  Doc.  157. 


300  FARMERS'  ORGANIZATIONS 

Aaron  Jones,  Worthy  Master  of  the  National  Grange,  speaking 
before  the  National  Grange  meeting  in  Portland,  Oregon,  in  1904, 
summed  up  Grange  achievements  in  these  words: 

"A  generation  has  passed,  crowded  with  greater  advancement  than  any 
similar  period  in  the  world's  history,  since  our  organization  was  founded  to 
meet  conditions  essential  to  pubUc  welfare.  It  was  consecrated  to  develop 
the  best  type  of  social  conditions,  to  foster  and  promote  good  citizenship,  to 
develop  agriculture,  to  secure  equity  in  the  business  relations  of  the  agricul- 
tural classes  with  the  industrial  and  commercial  inteiests  of  our  country  .  .  . 
The  Grange  removed  the  isolation  of  the  farm  homes,  inculcated  and  promoted 
education,  fostered  and  secured  better  schools  for  our  children,  raised  the 
standard  of  inteUigence  among  the  farming  population,  developed  the  latent 
talent  of  its  members,  making  them  logical  thinkers  and  writers  and  fluent 
.speakers,  understanding  the  relation  of  agriculture  to  the  varied  and  complex 
social,  industrial  and  commercial  interests  of  our  country  and  the  world.  These 
glorious  results  were  attained  by  steadfast  adherence  to  the  principles  of  our 
Order  and  methods  suggested  by  the  founders  of  our  Fraternity." 

The  greatest  significance  of  the  Grange,  as  well  as  its  most 
lasting  achievements,  have  been  in  the  social  and  educational 
influences  which  it  has  mobilized.  Farmers  and  their  wives  and 
daughters  have  here  met  together,  and  together  have  enjoyed  their 
music,  their  literature,  their  recreations,  their  beautiful  and  digni- 
fied ritual,  and  their  serious  deliberations.  This  wider  neighbor- 
hood contact  has  been  wholesome  and  pure  and  good.  It  has  made 
for  a  certain  culture  and  refinement  not  so  easily  attainable  by 
the  rural  dweller  as  by  the  urbanite.  It  has  tended  to  socialize 
the  community  and  to  foster  community  leadership  by  the  farmer, 
for  the  farmer,  and  of  the  farmer. 

3.  Local  Farmers*  Organizations. — For  many  decades  farmers 
have  maintained  with  conspicuous  success  local  and  State-wide 
organizations  along  economic  and  educational  lines,  with  the 
emphasis  on  the  educational  side.  Thus  we  have  the  various  State 
Agricultural  Societies,  the  State  Horticultural  Societies,  the  Pomo- 
logical  Societies,  and  so  on.  Most  of  these  societies  meet  annually 
and  publish  a  volume  of  proceedings.  The  discussions  have  dealt 
almost  entirely  with  the  production  side  of  the  problem,  rather 
than  with  the  marketing  side.  Live-stock  associations  form  another 
large  groups  of  a  similar  nature.  A  mere  list  of  the  names  of  these 
would  fill  many  pages.^ 

In  more  recent  years  these  local  farmers'  organizations  have 
more  and  more  gone  into  marketing  questions.    Thus  we  have  an 

^  The  1917  Yearbook,  United  States  Department  of  Agriculture,  pp.  595- 
608,  contains  a  b'st  of  7  National  Live-stock  Associations,  19  National  Poultry 
Associations,  and  314  State  Associations  of  live  stock  and  poultry. 


POLITICAL  ORGANIZATIONS  OF  FARMERS  301 

increasing  number  of  farmers'  organizations  that  are  purely 
cooperative  marketing  associations.  Some  typical  examples  of 
this  have  already  been  described  in  the  chapter  on  Cooperation. 
Others  lay  stress  on  the  general  protection  coming  from  being 
banded  together.  As  an  example  of  this  may  be  cited  the  Farmers' 
Grain  Elevator  movement.  As  the  movement  stands  at  the 
present  writing  (the  year  1919),  it  may  be  graphically  repre- 
sented as  follows: 

Farmers^  Grain  Elevators  in  the  United  States. 

400,000  farmers  own  stock  in  grain  elevators 
4,000  country  elevators  owned  by  farmers 

12  State  Associations  of  Farmer  Grain  Dealers  ] 
1  National  Council  representing  these  12  Associations 
1  Journal  as  the  official  organ  of  this  Council.  ^ 

Among  the  accomplishments  claimed  by  the  above  organiza- 
tion of  farmers  are  the  following:  sulphured  oats  permitted  in 
interstate  commerce;  federal  grain  grades;  federal  supervision  of 
grain  inspection;  patronage  dividends  exempt  from  income  tax. 
On  the  program  of  things  to  do  are  the  following:  handle  freight 
and  traffic  matters,  particularly  increase  in  freight  rates  on  grain, 
or  regulations  pertaining  to  loss  and  damage  claims,  or  bill  of 
lading  matters;  car  shortage  problems;  in  short,  protect  the 
interest  of  farmers  in  production,  transportation,  and  marketing 
of  grain. 

4.  Political  Organizations  of  Farmers. — In  agriculture  as  in 
labor  the  idea  has  often  gained  temporary  sway  in  local  areas  that 
a  class  party  was  needed.  This  has  occurred  in  spite  of  the  fact 
that  the  trend  of  our  political  evolution  has  been  against  either 
class  or  sectional  divisions  of  our  voters.  A  class  party  was 
started  in  1915  among  the  wheat  farmers  of  North  Dakota,  under 
the  name  of  ''Nonpartisan  League." 

The  Farmers'  Nonpartisan  Political  League,  as  this  party  came 
to  be  called,  came  into  full  control  of  the  North  Dakota  State 
government  in  1919,  in  all  three  branches — legislative,  executive, 
and  judicial.  It  had  chosen  a  governor  in  1916,  and  secured  com- 
plete control  of  the  executive  and  judicial  branches  of  the  State 
government.  The  League  vote  for  governor  in  1916  was  87,665; 
in  1918,  54,917.  This  movement  began  both  as  a  union  (on  the 
labor  union  principle),  charging  a  membership  of  six  dollars  a 
year,  and  as  a  political  party,  nominating  candidates  and  adopting 

^  The  12  States  are:  Texas,  Oklahoma,  Kansas,  Nebraska,  South  Dakota, 
North  Dakota,  Minnesota,  Iowa,  lUinois,  Indiana,  Ohio,  and  Michigan. 
^  This  Journal  is  the  American  Cooperative  Journal,  Chicago. 


302  FARMERS'  ORGANIZATIONS 

a  platform.    The  background  of  the  movement  is  both  economic 
and  political. 

Economic  Background. — The  movement  began  in  North 
Dakota  in  1915,  as  a  culmination  of  ten  or  fifteen  years  of  agitation 
on  the  wheat  marketing  question.  By  the  year  1915  North  Dakota 
ranked  second  only  to  Kansas  as  a  wheat  producing  State.  But 
unlike  Kansas,  the  Dakota  wheat  was  not  milled  within  the  State ; 
it  was  shipped  chiefly  to  two  Minnesota  points — to  Duluth  for 
export,  or  to  Minneapolis  for  milling.  Hence  the  weighing, 
inspecting,  grading,  and  docking,  were  all  done  by  interests 
entirely  outside  the  control  of  the  North  Dakota  farmer  or  the 
North  Dakota  government.  And  to  the  North  Dakota  farmer, 
price  fixing  on  his  wheat  seemed  to  be  done  autocratically  and 
arbitrarily  by  the  Minneapolis  and  Duluth  Grain  Exchanges.  In 
such  cases,  the  farmer  always  feels  a  sense  of  voiceless  helplessness, 
a  sense  of  indignation  and  resentment,  and  a  sense  of  rebellion. 
It  is  now  a  matter  of  economic  history  that  the  weighing,  inspec- 
tion and  grading  of  grain  by  the  State  of  Minnesota  had  for  many 
years  been  done  in  a  fair  and  efficient  manner;  that  the  old  arbi- 
trary margin  of  8  or  10  cents  a  bushel  on  the  farmer's  grain,  fixed 
and  taken  by  the  big  line  elevator  companies,  had  given  place, 
thanks  to  the  hundreds  of  farmers'  elevators,  to  a  narrow  competi- 
tive margin;  and  that  the  price  of  wheat  was  fixed  on  a  world-wide 
market  outside  of  and  beyond  all  the  Grain  Exchanges  of  the 
United  States.  But  the  North  Dakota  settlers,  pioneering,  de- 
pending on  one  crop,  had  come  to  feel  that  they  were  the  victims 
of  injustice  in  wheat  marketing.  All  their  discontent  was  focussed 
on  this  one  point.  Leaders,  selfish  and  otherwise,  had  created  the 
belief  that  the  simple  remedy  for  the  injustice  was  in  a  terminal 
elevator  or  number  of  terminal  elevators,  owned  and  operated  by 
the  State.  The  voters  amended  the  State  Constitution — a  four- 
years  process — to  enable  the  Legislature  to  provide  the  terminal 
elevator.  The  Legislature  refused  to  pass  a  terminal  elevator  law. 
This  was  the  crowning  ''injustice,"  the  farmers  felt,  for  their 
years  of  hope  and  effort,  and  the  whole  farming  population  of  the 
State  was  plunged  into  a  state  of  anger.  It  counted  for  naught 
that  the  business  members  of  the  legislature,  after  an  impartial 
survey  and  discovery  of  several  terminal  elevators  for  sale  at  half 
price,  had  decided  that  the  venture  was  too  risky  for  experimenta- 
tion with  public  funds.  At  this  juncture  a  group  of  organizers 
of  the  Socialist  party  left  that  party  and  began  a  most  vigorous 
organization  of  a  farmers'  Socialist  party  under  the  name  of  the 


FARMERS'  PARTIES  IN  THE  PAST  303 

Farmers'  Nonpartisan  Political  League — or  Nonpartisan  League, 
as  it  was  called  for  short. 

Political  Background. — Financial,  industrial,  and  railroad  inter- 
ests had  long  had  control  of  the  State  government,  the  farmer  mem- 
bers of  the  State  Legislature  being  unable  to  cope  with  such  forces. 
The  feeling  had  taken  root  that  even  the  State  governors  were 
nominated  from  time  to  time  by  a  small  group  of  friends  in  a 
secret  meeting  in  a  St.  Paul  hotel. 

Hence  the  canvassers  for  the  new  party  found  the  farmer's 
mind  prepared  for  insurrection,  both  political  and  economic.  And 
since  the  canvassers  themselves  were  receiving  a  liberal  conmiission 
on  each  membership  sold,  they  developed  some  skill  in  salesman- 
ship. Membership  dues  were  raised  to  $9  a  year,  and  later  to 
$16  for  two  years.  Soon  40,000  farmers  in  North  Dakota  were 
enrolled.  This  was  enough  to  control  both  nominations  and  elec- 
tions of  candidates.  The  North  Dakota  Legislature  in  1919 
enacted  into  law  the  complete  League  program  with  a  $17,000,000 
bond  issue  back  of  it,  the  major  part  of  which  program  was  as  fol- 
lows: (1)  State-owned  flour  mills  and  terminal  elevators,  financed 
by  $5,000,000  of  State  credit;  (2)  State  loans  to  home  builders, 
land  piu-chasers,  and  others,  financed  by  $10,000,000  of  State 
credit;  (3)  a  state-owned  and  operated  bank,  financed  by  $2,000,000 
of  State  credit;  (4)  control  of  education  transferred  to  board  of 
five  persons,  three  of  whom  to  be  appointed  by  the  Governor; 
(5)  a  State  printing  bill,  having  to  do  chiefly  with  the  country 
press,  and  providing  that  one  paper  only  in  each  county  receive 
official  pubhc  printing;  (6)  an  Industrial  Commission  of  three 
members — the  Governor,  Attorney  General,  and  Commissioner  of 
Agriculture  and  Labor — to  have  charge  of  the  State  Bank,  the 
State  Elevators,  the  State  Flour  Mills,  and  all  other  State 
business  enterprises. 

The  League  spread  into  fifteen  States  during  its  first  four  years. 
In  1919  it  had  three  members  of  Congress  from  North  Dakota. 
It  also  maintained  a  complete  propaganda  machinery,  consisting 
of  three  daily  papers,  some  forty  or  fifty  weeklies,  and  an  able 
corps  of  paid  speakers.  With  its  income  of  several  millions  of 
dollars  it  was  able  to  carry  on  an  organized  campaign  such  as  few 
other  political  parties  were  ever  able  to  do.  Its  wealth  and  its 
success  drew  to  it  the  usual  army  of  camp  followers  seeking  only 
the  loaves  and  fishes.     Its  decHne  began  in  1920. 

Farmers'  Parties  in  the  Past.— (1)  The  National  Farmers' 
League,  in  the  year  1891,  was  active  in  twenty-eight  States.   This 


304 


FARMERS'  ORGANIZATIONS 


was  an  era  of  great  activity,  economic  and  political,  among  farmers' 
organizations.  The  League  above  named  came  out,  finally,  as  a 
distinctly  political  party.  In  this  form  it  speedily  disappeared 
from  sight.  (2)  The  Populist  Party.  The  Farmers'  Alliance  of  the 
Middle  West  and  South  at  about  this  same  time  attained  to  great 
nimibers  and  strength,  working  for  economic  reforms,  particularly 
cooperative  stores.  However,  by  the  year  1892,  it  had  entered 
poUtics  under  the  name  of  "People's  Party."  The  Populist  Party, 
as  it  was  generally  called,  elected  many  State  and  a  few  Congres- 
sional candidates  for  office.    Some  of  its  reforms  were  abandoned 


HS^Mkll 

li 

%4..    J^      ^-/^         '%     W'     #"             -  »    . 

i 

Fig.  53. — The  Canadian  Council  of  Agriculture,  composed  of  four  delegates  from  each  of  the 
following  organizations:  United  Farmers  of  Alberta,  Saskatchewan  Grain  Growers'  Associa- 
tion, Manitoba  Grain  Growers'  Association,  Saskatchewan  Cooperative  ElevatorJCo.,  United 
Grain  Growers,  United  Farmers  of  Ontario,  United  Farmers*  Cooperative  Company  of 
Ontario,  Grain  Growers'  Guide. 

as  either  impracticable  or  ahead  of  the  times ;  others  were  adopted 
by  the  dominant  parties.  Hence  the  Populist  party  disappeared 
as  suddenly  as  it  had  risen. 

Canadian  Council  of  Agriculture. — The  careful  reader  of  this 
chapter,  who  is  familiar  with  our  economic  and  political  history, 
has  already  compared  agricultural  organizations  with  labor 
organizations  in  the  United  States,  as  to  aims  and  methods.  The 
two  outstanding  labor  organizations  since  the  Civil  War  have  been 
the  Knights  of  Labor  and  the  American  Federation  of  Labor. 
The  Knights  of  Labor  entered  politics  in  order  to  secure  the  reforms 
they  wanted.    That  is,  they  aimed  to  nominate  and  elect  candi- 


CANADIAN  COUNCIL  OF  AGRICULTURE 


305 


dates  to  public  office.  The  Knights  of  Labor  disappeared  entirely 
as  a  labor  organization.  The  American  Federation  of  Labor  for 
nearly  forty  years  has  gained  steadily  in  strength  and  power,  and 
has  at  the  same  time  kept  out  of  politics.  This  Federation  seeks 
to  secure  legislation  by  asking  for  it,  not  by  nominating  and 
electing  candidates  to  public  office.  The  Federation  speaks  for 
two  milhon  or  more  organized  dues-paying  laboring  men,  and 
hence  its  voice  is  heard  by  the  national  and  State  lawmakers. 
This  statement  concerning  the  American  Federation  of  Labor  may 
help  to  make  clearer  the  aim  and  methods  of  the  Canadian  Council 
of  Agriculture. 

The  Canadian  Council  of  Agri* 
culture  is  a  Parliament — of  the 
farmers,  by  the  farmers,  and  for 
the  farmers  (Fig.  53) .  It  holds  two 
regular  sessions  a  year  at  Win- 
nipeg, where  it  maintains  per- 
manent offices  in  charge  of  a  paid 
secretary  (Fig.  54).  The  Council  is 
composed  of  four  representatives 
from  each  important  province- 
wide  farmers'  organization.  In 
the  year  1919  the  membership  was 
36,  representing  four  educational 
and  propaganda  organizations, 
three  cooperative  commercial 
organizations,  one  farmers'  news- 
paper, and  one  association  of 
women,  as  follows:  (1)  United 
Farmers  of  Alberta,  (2)  Saskatche- 
wan Grain  Growers'  Association, 
(3)  Manitoba  Grain  Growers'  Association,  (4)  United  Farmers  of 
Ontario,  (5)  Saskatchewan  Cooperative  Elevator  Company,  (6) 
United  Grain  Growers,  (7)  United  Farmers'  Cooperative  Company 
of  Ontario,  (8)  Grain  Growers'  Guide,  (9)  Canadian  Farm  Women's 
Interprovincial  Association.  The  Council  began,  in  1909,  solely 
as  the  representative  body  of  the  educational  organizations.  But 
it  lacked  funds  with  which  to  finance  any  important  activities  or 
services.  Accordingly,  in  the  year  1916,  the  great  cooperative 
trading  companies  of  the  grain  growers  were  admitted  to  member- 
ship, and  a  per  capita  fee  of  25  cents  charged.  These  trading 
companies,  of  course,  included  almost  the  identical  farmers  who 
20 


Fig.  54. — Roderick  McKenzie,  one  of  the 
organizers  of  the  United  Grain  Growers,  the 
Grain  Growers  Guide  and  the  Canadian 
Council  of  Agriculture.  First  Secretary  of 
the  Canadian  Council  of  Agriculture. 


306  FARMERS'  ORGANIZATIONS 

composed  the  educational  associations.  At  this  time  the  Council 
took  on  new  strength  and  vigor,  and  issued  its  first  ''Farmers' 
Platform."  This  platform,  endorsed  by  the  constituent  organiza- 
tions, was  an  expression  of  the  farmers'  views  upon  economic, 
political  and  social  questions.  It  was  a  scheme  of  reforms  for 
benefiting  not  merely  farmers  but  wage  earners,  artisans,  profes- 
sional men  and  tradespeople.  This  platform  calls  for  tariff  reform 
and  a  complete  abandonment  of  the  protective  poUcy;  taxes  to  be 
imposed  on  unimproved  land  value,  on  incomes  and  on  inherit- 
ances; nationalization  of  railways,  telegraph  and  express  companies; 
natural  resources  to  be  developed  by  the  government  through  a 
leasing  system;  the  initiative,  referendum,  and  recall;  publicity  of 
campaign  contributions;  abolition  of  the  patronage  system;  each 
Province  to  have  autonomy  in  liquor  legislation  (to  the  end  that 
federal  laws  might  not  impede  local  prohibition) ;  woman  suffrage 
in  any  Province  to  confer  automatically  woman  suffrage  in  federal 
elections.  Although  the  farmers'  movement  in  Canada  began  in 
a  struggle  to  improve  conditions  in  the  grain  trade,  this  platform 
contains  no  mention  of  the  grain  trade.  This  is  conclusive  evidence 
of  the  farmers'  success  in  solving  the  grain  trade  problem,  them- 
selves, through  cooperation,  In  1918  a  new  platform  was  drawn 
up,  embodying  these  same  principles  excepting  those  which  had 
been  enacted  into  law  by  the  Parliament  at  Ottawa. 

The  aims  of  the  Canadian  Council  of  Agriculture  are  five,  as 
set  forth  in  its  Constitution,  namely,  (1)  to  encourage  the  farm 
population  of  the  Dominion  of  Canada  to  organize  for  the  study 
of  educational,  economic,  social,  and  poKtical  problems  having  a 
bearing  on  the  happiness  and  material  prosperity  of  the  people. 
(2)  To  constitute  in  itself  a  medium  through  which  the  various 
organizations  in  membership  may  act  collectively  where  their 
common  interests  are  concerned.  (3)  To  establish  a  bureau  for 
the  collecting  and  disseminating  of  statistics  and  other  information 
bearing  on  rural  welfare.  (4)  To  provide  unity  of  action  on  matters 
of  common  interest  to  the  organizations  in  membership  and  to 
formulate  demands  for  legislation  and  present  the  same  to  the 
Parhament  of  Canada.  (5)  To  investigate  methods  of  taxation 
for  providing  national  revenue  and  disseminate  information  thus 
secured  through  farmers'  organizations. 

The  achievements  of  the  Council  have  been  substantial. 
Many  of  its  planks  have  been  enacted  into  legislation.  But  more 
important  is  the  fact  that  it  has  been  the  farmer's  voice.  It  does 
not  take  a  psychologist  to  recognize  the  truth  that  when  the  farmer 


HOW  SECURE  ECONOMIC  REFORMS?  307 

is  silent  in  the  face  of  real  or  imagined  wrongs,  he  becomes  grad- 
ually more  bitter  and  rancorous  in  his  heart,  ready  to  follow  any 
demagogue  or  radical  leader  who  can  recite  to  him  the  story  of 
his  wrongs,  until,  finally,  like  a  giant  blindfolded,  he  strikes  out 
wildly  and  madly  at  he  knows  not  what.  And  monopoly,  or  the 
semblance  of  monopoly  in  high  places,  whether  economic  or  politi- 
cal, is  to  the  farmer  an  intolerable  tyranny.  The  Canadian  Council 
of  Agi-iculture  has  furnished  farmer  leadership  for  the  rank  and 
file  of  the  farmers  themselves.  Under  this  leadership,  the  farmer 
feels  that  he  counts  in  the  state,  that  he  is  significant,  that  he  has 
a  voice  that  not  only  is  heard  but  is  heeded.  A  member  of  the 
Council  summed  up  its  achievements  in  these  words:  "There 
can  be  no  doubt  that  the  Council  has  become  an  important  factor 
in  moulding  the  public  life  of  Canada.  And  we  confidently  look 
forward  to  its  exercising  an  ever  increasing  influence  in  all  that 
makes  for  the  well-being  of  the  people." 

Problems  to  Face. — Farmers'  organizations  have  done  enough 
experimenting  thus  far  to  bring  out  in  sharp  outline  some  very 
definite  problems.  Assuming  that  we  are  to  have  more  rather 
than  fewer  farmers'  organizations  in  the  future,  an  early  consider- 
ation of  the  problems  and  a  policy  towards  them  are  necessary 
for  the  farmers  and  for  all  others  interested  in  a  broad  way  in  a 
permanent  and  prosperous  agriculture.  This  chapter  is  therefore 
concluded  ^vith  a  brief  statement  of  a  few  of  these  problems. 

(1)  How  Secure  Political  Reforms? — Shall  the  farmers  imitate 
the  Knights  of  Labor,  and  enter  directly  into  political  action  as  a 
class?  Or  shall  farmers  imitate  the  American  Federation  of  Labor, 
leaving  the  nomination  and  election  of  candidates  to  existing 
parties,  but  standing  for  a  definite  program  of  legislation?  In 
American  political  evolution  class  parties  have  been  considered 
inimical  to  the  general  welfare,  and  have,  thus  far,  accomplished 
but  little. 

(2)  How  Secure  Economic  Reforms? — In  the  labor  world,  the 
farmer  may  study  various  efforts  at  economic  reform,  such  as 
"direct  action,"  the  strike,  syndicalism,  socialism,  limitation  of 
output,  and  the  collective  bargain. 

Already  in  several  cases  farmers'  organizations  have  used  the 
strike  with  success.^  Syndicalism  is  roughly  paralleled  in  those 
cases  where  the  farmers  have  secured  the  collective  ownership 
and  operation  of  certain  enterprises.    Collective  action  (coopera- 

^  This  is  notably  true  in  the  so-called  "milk  war"  in  the  Chicago  District 
in  1915,  and  in  the  New  York  District  in  1916  and  in  1919. 


308  FARMERS'  ORGANIZATIONS 

tion)  is  now  very  common  in  the  marketing  of  farm  products;  it 
is  not  common  in  the  field  of  production  of  farm  products. 

Limitation  of  Output. — There  is  no  close  parallel  here  between 
farmers'  unions  and  labor  unions.  Limitation  of  output  has  been 
practiced  in  a  few  cases  by  a  few  unions ;  limitation  of  output  by 
farmers  really  means  a  shifting  of  output.  Thus  the  southern 
planters  in  the  season  of  1919  made  a  gigantic  campaign  to  limit 
the  cotton  acreage.  This  limitation  of  output  of  cotton  was  mis- 
understood and  even  condemned  by  many.  However,  while  it 
meant  less  cotton,  it  meant  more  corn,  more  hogs,  more  hay — all 
of  which  products  the  South  consumed  in  great  quantities.  ''Limi- 
tation of  output"  in  this  sense  of  the  word  is  not  only  wise,  but 
necessary,  if  the  farmers  are  ever,  collectively,  to  remove  some 
of  the  "anarchy"  now  existing  in  the  coordination  of  supply 
to  demand. 

Collective  Bargaining. — Collective  bargaining  is  now  a  common 
method  of  adjusting  wages,  hours,  and  conditions  in  several  of 
the  larger  labor  unions  of  the  country.  The  United  Mine  Workers 
of  America  have  repeatedly  demonstrated  the  wisdom  and  value  of 
this  orderly  and  democratic  way  of  industrial  functioning.  The 
farmer  is  just  now  beginning  to  use  this  method.  But  since  he  is 
not  selling  his  labor  for  ''wages"  but  his  crop  for  a  "price,"  he 
has  already  come  into  collision  with  the  law  against  "price  fixing." 
Hence  collective  bargaining  by  farmers  is  not  making  much  head 
against  the  present  legal  status  of  this  method  of  adjusting  price. 
However,  if  there  is  one  place  above  all  others  where  the  farmer 
feels  he  is  the  silent  victim  of  a  system  of  tyranny,  it  is  exactly 
here  in  the  field  of  price  making.  It  is  inevitable,  therefore,  that 
the  courts  and  the  legislators  will  adjust  the  law  to  fit  economic 
evolution.  Collective  bargaining  is  now  in  successful  use  by 
farmers  in  many  different  places.  A  conspicuous  example  is  that 
of  the  Dairymen's  League  and  the  large  milk  distributors  of  New 
York  City.  A  few  steps  have  been  taken  towards  this  goal  by  the 
big  meat  packers  and  the  farmers  in  the  various  live-stock  asso- 
ciations. However,  the  federal  and  State  anti-trust  laws  are  such 
as  to  cause  hindrance  and  delay  in  actually  carrying  on  collective 
bargaining  by  farmers. 

(3)  How  Secure  Leadership? — In  one  sense  the  farmers  seem 
to  be  victims  of  the  vicious  circle — unable  to  produce  real  farmer 
leadership  without  organizations  and  unable  to  produce  farmers' 
organizations  without  leadership.  While  the  farmer  is  blest  with 
a  large  amount  of  able,  unselfish  leadership  from  the  ranks  of 


REFERENCES  309 

those  not  farmers,  yet  it  is  doubtless  true  that  he  would  be  better 
off  if  he  had  more  leadership  from  the  rank  and  file  of  the  farmers. 
An  ideal  ''Council  of  Agriculture  of  the  United  States"  would 
produce  exactly  this  kind  of  leadership. 

QUESTIONS  ON  THE  TEXT 

1.  Describe  and  comment  on  the  meeting  of  the  bankers'  committee  on  agri- 

culture in  Washington  in  1919. 

2.  In  what  sense  is  it  true  that  the  farmers  are  not  mobOized? 

3.  What  are  the  two  general  methods  of  farmers'  organizations  securing 

benefits? 

4.  Which  method  has  the  Grange  used,  and  with  what  success? 

5.  Show  to  what  extent  labor  and  capital  are  organized.    Compare  agriculture. 

6.  Cite  the  case  of  mobihzation  by  the  Credit  Men's  organization. 

7.  Show  the  difficulty  of  classifying  farmers'  organizations. 

8.  According  to  two  farm  paper  investigations,  what  organizations  are  render- 

ing effective  service  to  their  communities? 

9.  Give  examples  of  farmers'  organizations  coming  under  each  of  the  following 

three  classes:   Federation;  national;  local. 

10.  Discuss  in  detail  the  Farmers'  National  Headquarters;  the  National  Board 

of  Farm  Organizations;  the  American  Federation  of  Farm  Bureaus. 

11.  What  national  organization  of  farmers  is  over  fifty  years  old? 

12.  Discuss  the  following  points  concerning  the  Grange:  present  status;  origin 

and  history;  second  rise  to  power;  economic  program;  achievements  of 
the  Grange;  relation  to  the  so-called  "granger  laws." 

13.  Discuss  scope  and  methods  of  local  farmers'  organizations. 

14.  Discuss  in  detail  the  Nonpartisan  Pohtical  League. 

15.  What  is  the  experience  of  farmers'  parties  of  the  past? 

16.  Discuss  in  detail  the  Canadian  Council  of  Agriculture,  and  compare  with 

Knights  of  Labor  and  American  Federation  of  I^abor. 

17.  What  problems  of  organization  now  face  the  farmers? 

18.  How  ought  farmers  secure  political  reforms?    Economic  reforms? 

19.  Show  the  merits  and  defects  of  the  following  economic  devices  in  organized 

agriculture:       strikes;    syndicalism;    Umitation    of    output;    collective 
bargaining. 

20.  How  shall  farmers  secure  farmer  leadership? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Prepare  a  short  history  of  each  of  the  five  national  farmers'  organizations. 

2.  Do  we  need  an  agrarian  party? 

3.  Discuss  the  achievements  of  the  agrarian  party  in  Germany. 

4.  Would   an   agrarian   party   in   this    country   be    classed   as    radical  or 

conservative? 

5.  How  should  a  federation  of  all  agricultural  interests  be  effected? 

6.  Discuss  the  1919  movement  in  the  South  to  Umit  the  cotton  acreage. 

REFERENCES 

1.  Atkeson,  T.  C:    "History  of  the  Grange." 

2.  Buck,  S.  J.:    "The  Grange  Movement." 

3.  BuTTERFiELD,  Kenyon:  "Chapters  in  Rural  Progress,"  Chicago,  1907, 
pp.  136-162. 

4.  Commons,  John  R.,  et.  al:  "Documentary  History  of  American  Indus- 
trial Society,"  Vol.  10,  Nos.  1,  2,  3,  4,  5,  6. 


310  FARMERS'  ORGANIZATIONS 

5.  Coulter,  John  Lee:  " Organization  Among  the  Farmers  of  the  United 
States."    Yale  Review,  New  Haven,  November,  1909. 

6.  Darrow,  J.  Wallace:    "History  of  the  Grange."    Chatham. 

7.  Drayton,  C.  O.:  "  Farmers  must  be  Cooperators."  Equity  Textbook. 
Equity  Union  Pubhshing  Co.,  Greenville,  Illinois,  1914. 

8.  "Grain  Growers'  Textbook."  Published  by  Equity  Cooperative  Ex- 
change, Fargo,  North  Dakota,  1911. 

9.  "Grain  Growers'  Textbook,  No.  2."  Published  by  Equity  Cooperative 
Exchange,  St.  Paul,  1916. 

10.  "Industrial  Commission  Report,"  Vol.  10,  p.  ccclxi. 

11.  Lansdon,  W.  C,  Cooperation:  "History,  Necessity,  Methods."  A 
Textbook  for  Kansas  Cooperators.  Farmers'  Union  Library,  Vol.  1,  No.  1, 
Salina,  Kansas,  March,  1915. 

12.  Martin,  E.  W.:  "History  of  the  Grange  Movement,  or  the  Farmers' 
War  Against  Monopoly." 

13.  MiCHELL,  H.:  "The  Grange  in  Canada."  Bulletin  of  the  Department 
of  History  and  Pohtical  and  Economic  Science  in  Queen's  University,  King- 
ston, Ontario,  Canada,  No.  13,  October,  1914. 

14.  PiERSON,  Charles  W.:  "Rise  and  Fall  of  the  Grange  Movement; 
The  Outcome."    Popular  Science  Monthly,  December,  1887,  199-208;  368-373. 

15.  "  Proceedings  of  the  Annual  Sessions  of  the  Farmers'  National  Congress 
of  the  United  States."  Published  by  the  Secretary,  204  Second  St.,  S.  E., 
Washington. 

16.  "Proceedings  of  National  Farmers'  Association."  Published  by  the 
Secretary,  Waukesha,  Wisconsin. 

17.  McVey,  Frank  L.:  "The  Populist  Movement."  Economic  Studies, 
Vol.  1,  No.  3,  1896. 

18.  Boyle,  James  E.:  "The  Agrarian  Movement  in  the  Northwest." 
American  Economic  Retriew,  Vol.  8,  September,  1918,  pp.  505-521. 

19.  Gaston,  Herbert:    "The  Nonpartisan  League." 

20.  "National  Milk  Producers'  Federation."  American  Economic  Review, 
Vol.  7,  No.  4,  Dec,  1917.  By-Laws  of — See  Marketing  and  Farm  Credits 
(Chicago,  1916j,  430-432. 

21.  "American  Society  of  Equity."    Grain  Growers'  Guide,  April  11, 1917. 

22.  Drew, ■:  "The  Present  Farmers' Movement."    Political  Science 

Quarterly,  Vol.  6,  282-310,  1891. 

23.  Moorhouse,  Hopkins:  "Deep  Furrows"  (Cooperation  among  grain 
farmers  of  Canada). 

24.  Peffer,  Senator:  "The  Farmers'  Defensive  Movement,"  Forum, 
Vol.  8,  463-473,  1889. 

25.  Walker,  • :   "The  Farmers'  Movement."    Annals,  Vol.  4,  790- 

798,  1894. 

26.  Bailey,  L.  H.  (Editor; :  "Cyclopedia  American  Agriculture,"  Vol.  4. 
Ch.  7,  276-354. 

27.  Herron,  L.  S.:  "An  American  Farmers'  Movement."  The  Farmers' 
Union.    Grain  Growers'  Guide,  Feb.  19,  1919,  7. 

28.  For  Farmers'  Organizations  in  Other  Lands,  see  International  Review 
of  Agricultural  Economics,  Rome. 

29.  Pearson,  Raymond  A.:  "Agricultural  Organizations  in  European 
Countries,"  Department  of. Agriculture,  Albany,  Bulletin  66,  Dec,  1914. 

APPENDIX 

Principal  Farmers'  National  Organizations,  Giving  Name  and  Address  of  Official 

Organ 

1.  American  Society  of  Equity,  The  Equity  News,  Milwaukee,  Wis. 

2.  Equity  tjnion,  Equity  Union  Exchange,  Greenville,  111. 

3.  Farmers'  Educational  and  Cooperative  Union  of  America.    No  national 


APPENDIX  311 

organ.  The  following  are  state  or  local  organs:  Farmers'  Union,  Salina,  Kans. ; 
Pacific  Farmers'  Union,  Spokane,  Wash. ;  Colorado  Union  Farmer,  Denver,  Col. ; 
Farmers'  Union  Messenger,  Ft.  Worth,  Texas;  Nebraska  Union  Farmer,  Omaha, 
Neb.;  Iowa  Union  Farmer,  Columbus  Junction,  Iowa;  Union  Helper,  Mt. 
Vernon,  111.;  James  River  Clarion,  Lynchburg,  Va. 

4.  Gleaners,  Gleaner  and  Business  Farmer,  Detroit,  Mich. 

5.  Patrons  of  Husbandry,  National  Grange  Monthly,  Springfield,  Mass. 

6.  National  Milk  Producers'  Federation  (no  organ). 

Federation  of  Farmers 

7.  American  Federation  of  Farm  Bureaus  (no  organ). 

Political  Organizations 

8.  Nonpartisan  League,  Nonpartisan  Leader,  St.  Paul,  Minn. 

The  Farmer  in  Business. — "The  farmer's  interest  in  the  great  staple 
crops  of  cereals,  cotton,  wool,  sugar  beets,  sugar  cane,  hay,  beef  and  pork  ceases 
when  he  sells  the  crop.  Because  orange  and  apple  growers,  some  truck  growers 
and  milk  and  dairy  producers  have  developed  somewhat  in  marketing  enter- 
prises, all  consumerdom  has  undertaken  to  say,  and,  worse  than  that,  to  really 
think  that  the  farmer  can  market  his  products  to  consumers. 

"Mr.  Hamilton  talks  and  thinks  about  buying  food  direct  from  the  pro- 
ducers. He  would  have  considerable  trouble  in  buying  sugar  of  the  sugar  beet 
grower;  or  flour  of  the  wheat  grower,  or  pork  of  the  hog  raiser.  He  tried  a  few 
years  ago  to  help  start  a  "farmers'  "  market  in  his  city,  and  along  with  several 
hundred  other  business  men  is  now  unable  to  understand  why  it  has  "degener- 
ated" into  a  "huckster's"  market.    That  mental  hiatus  has  functioned  again. 

"The  facts  are  that  the  farmer  who  is  really  farming,  working  out  a  well- 
considered  plan  for  farm  operation  which  accounts  for  every  day  and  every 
acre;  work  for  his  men,  rain  or  shine;  and  work  for  his  stock  and  his  machinery 
which  will  make  each  individual  item  .self-sustaining,  has  no  time,  no  surplus 
energy,  no  talent  and  no  training  for  selling.  He  does  not  wish  to  subject 
himself  to  the  disagreeable  features  of  peddling,  or  selUng  over  the  counter. 
His  Ufe  habits  are  directed  to  production  and  sale  in  bulk.  Mr.  Hamilton 
would  not  think  of  turning  his  sales  over  to  the  foreman  of  his  machine  shop, 
but  he  would  do  worse  when  he  expects  the  successful  farmer  to  enter  the  selling 
game.  And  if  a  group  of  farmers  unite  and  hire  a  salesman,  and  provide  facih- 
ties  for  distribution,  it  is  an  open  question  if  they  can — or  will — market  and 
distribute  their  products  at  any  economy  over  the  present  competitive  dis- 
tribution system." — ''What  Mr.  Hamilton  Doesn't  Know"  by  T.  C.  Atkeson, 
Washington  Representative  of  the  National  Grange.  The  Nation's  Business, 
October,  1919,  -p.  26. 


CHAPTER  XX 

STATE  AID 

The  preceding  chapter  discussed  certain  attempts  at  self-help 
by  organized  farmers,  and  pointed  out  both  the  failures  and  suc- 
cesses of  these  efforts.  State  aid  is  that  form  of  aid,  direct  or 
indirect,  which  is  given  the  farmer  by  the  government.  There  are 
two  sources  of  state  aid,  that  coming  from  the  State  government 
and  its  local  divisions,  and  that  from  the  Federal  government. 
The  real  aim  of  all  state  aid  is  to  make  the  farmer  independent 
of  state  aid,  able  to  take  care  of  himself,  able  to  walk  alone  with- 
out leaning  on  his  government.  State  aid  takes  many  and  various 
forms:  some,  direct  financial  aid;  some  merely  regulatory,  such  as 
the  pure  food  laws;  some,  purely  educational.  Only  the  more 
prominent  forms  of  state  aid  can  be  discussed  here. 

Direct  State  Aid. — This  is  a  form  of  state  aid  which  has  been 
discredited  in  many  times  and  places,  and  yet  which  just  as  con- 
stantly reappears  in  one  form  or  another  as  though  it  were  some- 
thing new.  Space  is  lacking  to  give  a  detailed  history  of  each 
State's  experiences  in  this  field.  The  record  of  one  State  must 
serve  as  typical  for  the  other  States.  Hence  the  State  of  Kansas 
is  selected,  being  the  geographic  center  of  the  country.  Kansas 
experimented  repeatedly  with  subsidies  for  the  promotion  of 
certain  crops,  and  for  the  development  of  industries  for  the  further 
utilization  of  crops.    The  following  cases  illustrate  this  practice: 

Silk. — To  encourage  the  planting  of  mulberry  trees  and  the 
growing  of  silk- worms  the  State  of  Kansas  enacted  a  law  in  1887.^ 
Ten  years  later  the  attempt  was  abandoned  as  a  failure. 

Sugar  Beets. — To  encourage  the  growing  of  sugar  beets  in 
Kansas,  a  law  was  passed  in  1887  providing  for  a  bounty  of  two 
cents  a  pound  for  all  beet  sugar  made  in  the  State  from  beets 
grown  in  the  State.^  This  gave  the  industry  quite  a  spurt.  In 
1891  the  bounty  claimed  and  paid  was  over  $50,000.  In  1891  the 
rate  of  the  bounty  was  cut  to  f  of  a  cent  a  pound.  This  ''infant 
industry"  was  not  yet  able  to  walk  alone.  In  a  few  years  the 
bounty  was  entirely  removed.  A  further  decline  in  the  industry 
followed,  and  in  1897  the  last  piece  of  beet  sugar  machinery  was 
sold  and  sent  into  Nebraska  where  the  business  was  still  on  its 

1  Laws  of  1887,  chapter  231. 

2  Laws  of  1887,  chapter  231. 

312 


KANSAS  LAWS  313 

feet.  However,  in  1901,  interest  in  the  sugar  beet  was  again 
aroused,  and  so  the  State  Legislature  provided  a  bounty  of  one 
dollar  a  ton  on  all  sugar  beets  grown  in  the  State.  The  hope  of 
home  sugar  factories  was  abandoned.  A  limit  of  $5,000  in  any 
one  year  was  set  to  the  beet  bounty.  Sugar  bounties  paid  on  beet 
sugar  made  in  Kansas  were  as  follows: 

1889 $18,658.30 

1891 50,304.08 

1892 3,000.00 

1893 15,303.83 

1895 7,339.29 

1896 5,331.00 

Kansas  laws  were  frequently  enacted  at  the  request  of  local 
districts,  to  permit  them  to  grant  direct  aid  to  agriculture.  The 
following  are  typical  cases : 

The  city  of  Burlingame,  Osage  County,  was  authorized  to  vote 
$25,000  in  bonds  to  aid  in  establishing  a  woolen  mill  in  that  city.^ 

Smoky  Hill  Township,  McPherson  County,  was  authorized  to 
aid  in  erecting  a  flour  mill  with  a  subsidy  of  $6,000.^ 

All  counties  of  over  30,000  population  were  authorized  to  sub- 
sidize the  construction  of  starch  works  up  to  $41,000  each  county.^ 

Kentucky  Township,  Jefferson  County^  was  authorized  to  grant 
a  subsidy  to  a  flour  mill  to  the  amount  of  $10,000.^ 

Haskell  County  was  authorized  to  grant  a  subsidy  of  $1  an 
acre  for  brealdng  sod  in  that  county,  the  limit  to  be  $10,000.^ 

Cimarron  Township,  Gray  County,  was  authorized  to  subsidize 
the  building  of  a  flour  mill.^ 

This  same  legislature  authorized  ten  floiu-  mills  and  three  other 
private  enterprises. 

The  legislature  of  1893  authorized  two  townships  to  vote  $5,000 
each  in  aid  of  flour  mills.  The  1895  legislature  authorized  one 
township  to  grant  a  $3,000  subsidy  in  aid  of  a  flour  mill.  The 
State  Auditor's  bond  register  for  1900  shows  the  following  grants : 
Gray  County,  $15,000  for  a  beet  sugar  mill  and  $8,000  for  a  flour 
mill  and  $2,000  for  a  cheese  factory;  Hamilton  County,  $4,000  for 
a  flour  mill;  West  Plains  township  in  Meade  County,  $15,000  for 
a  beet  sugar  mill. 

Not  only  did  these  subsidized  industries  all  fail,  but  in  many 
cases  the  County  or  District  voting  the  bonds  defaulted  in  the 

^  Laws  of  1870,  chapter  36. 
*  Laws  of  1872,  chapter  85. 
6  Laws  of  1873,  chapter  33. 
6  Laws  of  1873,  chapter  48. 
'  Laws  of  1889,  chapter  154. 
^  Laws  of  1891,  chapter  44. 


314:  STATE  AID 

payment  of  interest  or  principal  of  these  bonds.  The  enterprises 
were  so  unsound  that  private  capital  refused  to  have  anything  to 
do  with  them.  It  is  usually  such  experiments  that  clamor  loudest 
for  public  funds.  The  later  history  of  these  Kansas  subsidies  is 
reflected  in  the  adjustments  and  settlements  found  necessary. 
Thus  the  Cimarron  township,  Gray  County,  mentioned  above. 
In  1897  the  State  of  Kansas  held  in  her  permanent  school  fund 
$15,000  of  the  flour  mill  bonds,  due  in  1902.  In  the  statute 
pertaining  to  this  case  are  these  words :^  ''Whereas,  the  said 
city  of  Cimarron  has  a  bonded  indebtedness  of  $55,000  and  a 
floating  indebtedness  of  about  $10,000,  and  is  in  default  of 
interest  due  on  bonds  more  than  $15,000,  making  a  total  in- 
debtedness of  $80,000,  and  the  property  of  all  kinds  in  said 
city  has  an  aggregate  assessed  valuation  of  only  $31,351,  and 
said  city  is  insolvent  and  unable  to  pay  but  a  small  per  cent  of  its 
indebtedness  .  .  .  therefore  .  .  .  the  mayor  and  council  of  said 
city  desire  to  scale  indebtedness  of  said  city  down  to  a  sum  upon 
which  they  can  pay  interest  and  ultimately  pay  the  principal." 
And  permission  was  granted  to  scale  down  the  debt.  The  city  of 
Anthony,  Harper  County,  went  through  a  similar  experience  twice, 
so  hard  was  it  to  learn  the  lesson  that  credit  is  a  two-edged  sword, 
to  be  used  with  care.^^  In  1896  the  commissioners  of  Lane  County 
formally  declared  the  county  insolvent,  and  issued  instructions  to 
the  county  treasurer  to  refrain  from  further  payments  of  interest 
on  the  bonded  indebtedness. 

Kansas,  in  common  with  other  States,  fully  demonstrated  the 
inherent  and  fundamental  unsoundness  of  using  public  credit  in 
direct  aid  to  agriculture.  It  was  a  mere  delusion  to  the  farmer  and 
a  curse  to  the  community  experimenting  with  it. 

General  State  Aid. — State  aid  to  agriculture  has  taken  such  a 
multiplicity  of  forms  that  it  is  impossible  to  make  even  a  catalog 
of  it  in  one  single  chapter.  In  general,  it  may  be  said  that  educa- 
tion, since  the  famous  Morrill  Act  of  1862,  represents  the  largest  of 
all  single  investments  of  State  funds  in  agricultural  matters.  This 
educational  outlay  has  vastly  expanded,  covering  teaching,  re- 
search, and  extension  work  by  State  agricultural  colleges  and 
Experiment  Stations.  Agricultural  education  has  also  been 
extended  into  city  high  schools  in  many  sections,  and  also  into 
county  agricultural  high  schools,  and  into  congressional  district 

9  Laws  of  1897,  chapter  178. 

1°  Laws  of  1897,  chapter  178;  also  Commercial  and  Financial  Chronicle, 
New  York,  February  20,  1897. 


THE  DEPARTMENT  OF  AGRICULTURE  315 

agricultural  schools  in  some  sections.  This  teaching  for  many- 
years  aimed  to  help  the  farmer  produce  more  and  better  crops. 
In  late  years  a  new  viewpoint  has  been  gained,  and  education 
goes  beyond  the  '^  making  of  two  blades  of  grass  grow  where  only 
one  grew  before":  much  attention  is  given  to  the  marketing  of 
crops;  to  financing  and  warehousing  and  transportation  problems; 
to  home  economics,  including  the  economic,  civic,  sanitary,  esthetic 
mental,  moral,  and  physical  well-being  of  the  family.  The  so- 
called  ''extension"  work  has  shown  the  most  rapid  expansion  of 
any  form  of  education.  It  is  a  form  of  propaganda  whereby  experts 
and  specialists  go  out  from  educational  centers  and  meet  the  people 
that  need  their  services.  ^  » 

State  Department  of  Agriculture  and  the  PoHcePower. — State 
aid  to  agriculture  very  early  took  the  form  of  exercising  the  police 
power  in  protecting  animals  from  diseaseg^nd  plants  from  insect 
pests.  The  destructive  power  of  the  foot-and-mouth  disease  of 
cattle,  of  cholera  among  hogs,  of  glanders  among  horses,  and  of 
other  diseases  among  other  animals  taught  the  need  of  quarantine 
regulations  and  of  State  administrative  boards  such  as  live-stock 
sanitary  commissions.  State  veterinary  boards,  and  so  on.  Similar 
protective  and  regulative  measures  were  administered  in  the  realms 
of  fruits,  vegetables,  and  general  farm  crops.  Anti-weed  laws, 
pure  food  laws,  pure  drug  laws,  pure  paint  laws,  and  similar 
statutes  have  greatly  increased  in  number  in  recent  years.  Pure 
seed  laws  in  still  more  recent  years  have  appeared,  as  have  hke- 
wise  laws  concerning  commercial  fertilizers,  commercial  feeding 
stuffs,  and  laws  on  cold  storage  warehouses.  The  administration 
of  such  regulations  has  been  left,  in  most  States,  to  a  State  Depart- 
ment or  Commissioner  of  Agriculture. 

Farmers'  Institutes. — In  some  cases  under  the  State  Agricul- 
tural Department,  in  others  under  the  guidance  of  the  College  of 
Agriculture,  so-called  Farmers'  Institutes  are  now  held  in  most 
States.  These  consist  of  a  group  of  meetings  in  which  speakers 
from  outside  the  community,  as  well  as  local  talent  discuss  import- 
ant agricultural  topics.  They  are  a  valuable  open  forum  for  the 
discussion  of  vital  topics. 

Federal  Government  Aid. — Federal  aid  to  agriculture  comes 
mainly  through  two  channels,  namely,  the  United  States  Depart- 
ment of  Agriculture,  and  financial  aid  given  to  State  institutions 
for  teaching,  research,  and  extension. 

The  Department  of  Agriculture. — The  history  of  the  Depart- 
ment of  Agriculture  may  be  briefly  stated  in  connection  with  the 


316  STATE  AID 

three  historical  dates,  1839,  1862,  and  1889.  (1)  In  the  year  1839 
Congress  made  the  first  law  recognizing  the  need  to  agriculture 
of  any  attention  from  the  Federal  government.  An  appropriation 
of  $1,000  was  voted  for  the  "collection  of  agricultural  statistics 
and  for  other  agricultural  purposes."  This  money  was  expended 
by  the  Commissioner  of  Patents,  for  he  was  the  only  individual 
in  the  Government  manifesting  any  interest  in  the  subject  of 
agriculture.  Hence  the  whole  agricultural  "department,"  such 
as  it  was,  remained  in  the  Patent  Office  till  the  year  1862.     (2) 


Fig.  55.— Tornado  near  Isabel.  S.  D..  June  25.  1914.    (U.  S.  D.  A.) 

The  organic  act  of  1862  gave  the  country  its  present  Department 
of  Agriculture,  although  it  was  not  till  later  under  a  Secretary  with 
a  cabinet  position.  The  organic  act  provided  foi-  a  "Commissioner 
of  Agriculture"  to  preside  over  the  new  department.  His  duties 
were  "to  acquire  and  to  diffuse  among  the  people  of  the  United 
States  useful  information  on  subjects  connected  with  agriculture 
in  the  most  general  and  comprehensive  sense  of  that  word,  and 
to  procure,  propagate,  and  distribute  among  the  people  new  and 
valuable  seeds  and  plants."  He  was  also  directed  to  make  prac- 
tical experiments  in  agriculture.  With  this  substantial  beginning, 
the  department  rapidly  expanded,  its  work  branching  out  into  the 
fields  of  plant  and  animal  diseases,  insect  pests,  farm  crops,  live 


THE  BUREAU  OF  ANIMAL  INDUSTRY 


317 


stock,  reclamation  of  waste  lands,  botany,  forestry,  chemistry, 
and  biology.  (3)  In  1889  the  Department  of  Agriculture  was 
elevated  in  rank,  having  at  its  head  a  Secretary  with  a  seat 
in  the  Cabinet.  Since  that  date  its  growth  has  been  contin- 
uous and  rapid.  The  present  organization  of  the  Department 
into  various  bureaus  is  shown  in  the  appendix  to  this  chapter. 
The  chief  functions  performed  by  the  Department  are  briefly  set 
forth  as  follows: 

A  Weather  Bureau  makes  studies  of  the  various  methods  of 
frost  protection  for  the  benefit  of  orchardists,  truck  growers,  and 


Fig.  56. — Applying  marks  of  inspection  to  passed  hog  carcasses  in  Oklahoma.  (U.  S.  D.  A.) 

others;  storm  warnings  are  set  out  for  the  benefit  of  both  agricul- 
ture and  shipping;  the  reporting  of  temperature  and  rainfall  and 
the  forecasting  of  weather  in  the  interests  of  agriculture  and  com- 
merce are  important  services  performed.  In  general,  this  bureau 
has  in  charge  investigations  in  meteorology  climatology,  seismol- 
ogy, and  aerology  (Fig.  55). 

The  Bureau  of  Animal  Industry  has  charge  of  meat  inspection 
at  the  packing  houses,  of  animal  quarantine,  of  eradication  of 
tuberculosis  of  live  stock  and  of  hog  cholera  and  of  the  cattle  tick; 
of  live  stock  and  dairy  demonstrations;  of  dairy  researjch;  in  short, 
the  bureau  aims  to  promote  the  live  stock  and  meat  industries  of 
the  United  States  (Fig.  56). 


318 


STATE  AID 


The  Bureau  of  Plant  Industry  deals  chiefly  with  combating 
plant  diseases  of  all  kinds — a  work  of  very  great  economic  import- 
ance (Fig.  57).  It  also  deals  with  crop  acclimatization  and  fiber- 
plant  investigations,  sugar  plant  studies,  cereal  investigations, 
seed  testing,  foreign  seed  and  plant  introduction,  and  with  ''free 
seed  distribution."  The  last-named  function  is  one  which  the 
farmers  are  asking  to  have  discontinued. 


Fig.  57. — Testing  out  a  new  spray. 

The  Forest  Service  has  charge  of  the  utilization,  protection 
(Fig.  58)  and  development  of  the  National  Forests,  now  comprising 
hundreds  of  miUions  of  acres.  The  work  also  covers  investigations 
into  methods  of  preserving  timber,  testing  of  woods,  and  educa- 
tional work  in  matters  of  forestry. 

The  Bureau  of  Chemistry  devotes  about  half  its  energy  to 
enforcement  of  the  Food  and  Drug  Act  (usually  called  the  ''pure 
food  law").  Chemical  investigations  are  made  for  other  depart- 
ments of  the  government.  Its  work  also  touches  the  bureaus  of 
plant  industry  and  of  soils  (Fig,  59). 


THE  BUREAU  OF  CHEMISTRY 


319 


Fig.  58.— Fire  patrol  duty,  Mt.  Silcox.    (U.  S.  D.  A.) 


Fig.  59.— Pharmacological  laboratory,  Bureau  of  Chemistry.     (U.  S.  D.  A.) 


320 


STATE  AID 


The  Bureau  of  Soils  conducts  chemical  and  physical  investiga- 
tions of  soils,  seeks  new  sources  of  natural  fertilizers,  particularly 
potash;  and  makes  soil  surveys  in  the  different  States. 

The  Biureau  of  Entomology  is  chiefly  engaged  in  combating 
insect  pests,  and  cooperates  in  many  ways  with  the  Bureau  of 
Plant  Industry.  Campaigns  are  waged  against  the  gipsy  and 
brown-tail  moth,  the  boll-weevil,  Hessian  fly,  and  against  various 
insect  carriers  of  plant  diseases. 


Fig.   60. — Results  of  poisoning  operation  by  assistants  of  the  Biological  Survey  in  Arizona. 
On  320  acres  1641  prairie  dogs  were  collected  after  one  night's  operation.    Total  cost  of  the 
extermination,  including  labor,  $9.79.     (U.  S.  D.  A.) 

The  Bureau  of  Biological  Survey  has  charge  of  the  enforcement 
of  the  Lacey  Game  Act,  and  the  administration  of  the  seventy 
Federal  bird  reserves  and  five  large-game  preserves.  Protection 
is  given  to  wild  ducks,  and  other  migratory  birds,  and  to  big  game. 
It  also  experiments  with  destruction  of  animal  pests  (Fig.  60). 

The  States  Relation  Service  is  the  bureau  in  charge  of  the 
supervision  and  control  of  federal  funds  expended  through  the 
State  Agricultural  Colleges  for  the  purposes  of  Research  and  Ex- 
tension. Under  the  four  acts  mentioned  below  (1862,  1887,  1906, 
1914)  this  bureau  has  a  very  important  and  far-reaching  service 
to  perform,  owing  to  the  centralizing  of  so  much  power  over  State 
education  in  a  few  hands  at  Washington  (Fig.  61). 


THE  BUREAU  OF  CROP  ESTIMATES 


321 


The  Office  of  Home  Economics  began  with  food  questions,  but 
soon  widened  its  scope  to  include  household  management  and 
equipment,  and  family  welfare. 

The  Bureau  of  Public  Roads  and  Rural  Engineering  was  created 
primarily  to  carry  on  investigations  in  regard  to  systems  of  road 
management,  road  construction  and  maintenance,  road  materials, 
farm  irrigation,  drainage,  domestic  water  supply,  construction  of 
farm  buildings,  and  miscellaneous  rural  engineering  problems. 
The  ''Good  Roads"  movement  throughout  the  United  States 
received  much  aid  and  backing  from  this  bureau  (Figs.  62  and  63). 


Fig.  61. — Pig  demonstration  at  a  boys'  short  course.     Maryland  College  of  Agriculture. 

The  Bureau  of  Markets  deals  with  the  problems  of  agricultural 
distribution,  transportation,  warehousing,  grading,  packing,  coop- 
erative marketing,  rural  credits,  and  cooperative  purchasing  (Fig. 
64).  It  has  charge  of  the  Cotton  Futures  Act,  the  Grain  Standards 
Act,  the  Warehouse  Act. 

The  Office  of  Farm  Management  covers  the  field  of  general 
agricultural  economics  (except  marketing),  including  studies  of 
cost  of  production,  farm  organization,  farm  finance,  insurance, 
taxation,  farm  labor,  drift  to  cities,  housing,  agricultural  history 
and  geography,  land  utilization  and  settlement,  land  tenure,  farm 
life  studies,  and  cooperation. 

The  Bureau  of  Crop  Estimates  collects  and  publishes  periodi- 
cally crop  and  live-stock  estimates.  The  grain  trade  has  now  come 
to  place  great  reliance  on  the  crop  estimates  gathered  by  this 
21 


322 


STATE  AID 


bureau  through  its  nation-wide  corps  of  volunteer  crop  reporters. 
The  ''Monthly  Crop  Reporter"  issued  by  this  bureau  is  also  a 
source  of  valuable  market  information  (Fig.  65). 


Fig.  62.— Road  construction.    (U.  S.  D.  A.) 


Fia.  63. — Road  construction.     General  view  of  plant  in  operation.     Note  method  used  in 
covering  concrete,  also  small  number  of  men  used.    (U.  S.  D.  A.) 


Five  federal  laws  dealing  in  a  broad  way  with  agricultural  edu- 
cation mark  the  nation's  increasing  recognition  of  the  basic  im- 
portance of  a  prosperous  agriculture.  These  five  acts  are  in  brief, 
as  follows : 


SMITH-LEVER  ACT.   1914 


323 


(1)  Morrill  Act,  1862. — This  is  the  law  which  established  in  the 
United  States  the  so-called  ''Land  Grant  Colleges,"  or  State  Col- 
leges of  Agriculture.  Thirty  thousand  acres  of  land  for  each  Sena- 
tor and  each  Representative  in  Congress  was  set  aside  as  a 
permanent  fund  for  the  endowment  and  maintenance  of  at  least 
one  agricultural  college  in  each  State. 


Fig.  64. — Government  inspector  examining  potatoes  rejected  by  buyer. 

(2)  Hatch  Act,  1887. — This  law  established  federal  Experiment 
Stations  in  connection  with  the  Agricultural  Colleges  created  by 
the  1862  law. 

(3)  Adams  Act,  1906. — This  act  makes  an  increase  in  the  fed- 
eral aid  granted  to  Experiment  Stations,  under  the  Hatch  Act. 

(4)  Smith-Lever  Act,  19 14.^ — This  act  provides  in  detail  a 
comprehensive   scheme   for   federal   supervision   and    control   of 

^  For  funds  available  to  each  State  under  this  Act,  see  Appendix  1  of 
next  chapter. 


324 


STATE  AID 


moneys  expended  by  the  agricultural  colleges  under  the  Hatch 
and  Adams  Acts,  and  under  this  Act,  in  order  that  the  Federal 
Government  may  be  in  constant  touch  with  these  institutions. 
This  act  organizes  on  a  vast  scale  the  extension  work  of  the  col- 
leges. The  work  is  on  a  cooperative  basis,  both  as  to  financial 
support  and  as  to  control,  each  particular  project  being  mutually 
agreed  upon  by  the  college  and  the  Secretary  of  Agriculture  and 
approved  in  advance.    The  college  thus  becomes  the  organizing 


Fig.  65. — County  section,  division  of  crop  reports,  Bureau  of  Crop  Estimates,  expert  tabula- 
tors and  computers,  who  work  up  returns  from  3000  county  reporters  who  report  crop  and 
live-stock  conditions  in  their  respective  counties.    This  constitutes  one  source  of  information 
upon  which  the  government  crop  reports  are  based. 

center  for  the  extension  work,  which  now  has  four  principal  forms, 
namely,  (a)  county  agricultural  agents;  (6)  boys'  and  girls'  clubs; 
(c)  extension  specialists,  who  cooperate  with  the  county  agents  in 
influencing  the  rural  population  directly;  (d)  home  economics, 
which  is  work  for  the  farm  women  and  the  farm  home. 

(5)  Vocational  Education  Act  of  1917. — This  act  appropriates 
money  for  the  support  of  vocational  education  of  secondary  grade 
in  agriculture,  home  economics,  and  industry.  The  act  provides  a 
scheme  of  cooperation  between  the  Federal  Government  and  the 


VOCATIONAL  EDUCATION  ACT  OF  1917 


325 


States.  Under  this  act  the  Federal  Government  does  not  propose 
to  undertake  the  organization  and  immediate  direction  of  voca- 
tional training  in  the  States,  but  does  agree  to  make  from  year  to 
year  substantial  financial  contribution  to  its  support.  It  under- 
takes to  pay  over  to  the  States  annually  certain  sums  of  money 
and  to  cooperate  in  fostering  and  promoting  vocational  education 
and  the  training  of  vocational  teachers.  The  grants  of  Federal 
money  are  conditional  and  the  acceptance  of  these  grants  imposes 


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FiQ.  66. — Federal  Government  appropriations  to  the  United  States  Department  of  Agricul- 
ture and  to  the  state  agricultural  colleges,  for  the  fourteen  years,  1904-1917. 

on  the  States  specific  obligations  to  expend  the  money  paid  over 
to  them  in  accordance  with  the  provisions  of  the  act.  The  State 
must  show  the  kinds  of  vocational  education  for  which  it  is  pro- 
posed that  the  appropriations  shall  be  used,  and  the  kinds  of 
schools  and  the  equipment  of  the  schools  in  which  the  instruction 
is  to  be  given.  The  State  must  set  up  courses  of  study,  methods 
of  instruction,  and  qualifications  of  teachers  who  are  to  give 
such  instruction. 

Every  dollar  of  Federal  funds  must  be  matched  by  a  dollar 
of  State  or  local  funds,  or  both. 


326  STATE  AID 

The  administration  of  these  funds  represents  a  chain  of  three 
Unks  as  follows:  Local  School — State  Board — Federal  Board  for 
Vocational  Education. 

This  form  of  administration  leaves  initiative  with  the  local 
school  and  the  State  Board. 

Money  is  appropriated  for  three  kinds  of  education,  namely, 
agriculture,  home  economics,  trades  and  industries. 

The  Federal  appropriation  for  agriculture  under  this  act  is 
as  follows : 

(a)  For  salaries  of  teachers,  supervisors,  and  directors  of  agri- 
cultural subjects: 

1917-18— $548,000 
Increases  annually  to  1925-26 
1925-26,  and  after— $3,027,000 

(6)  For  training  teachers,  a  portion  of  which  shall  be  used  for 
the  training  of  teachers,  supervisors,  and  directors  of  agriculture: 

1917-18— $546,000 
Increases  annually  to  1920-21 
1920-21,  and  after- $1,090,000 

Other  Forms  of  Aid. — In  addition  to  the  federal  aid  through  the 
Department  of  Agriculture  and  through  the  five  acts  named 
above,  there  are  other  forms  of  aid,  more  or  less  direct,  which 
should  be  mentioned.  They  are  the  Federal-aid  Road  Act,  which 
means  more  good  roads  for  the  farmers;  the  Farm  Loan  Act,  which 
means  to  the  borrowing  farmer  a  system  of  cheap  money  based 
on  first  mortgages  on  the  farmer's  land;  the  International  Institute 
of  Agriculture  at  Rome,  furnishing  basic  information  on  agricul- 
tural questions,  a  share  of  the  expense  of  which  is  borne  by  the 
United  States. 

Success  of  State  Aid. — State  aid  of  a  purely  educational  nature 
has  proved  an  unmixed  blessing  to  the  farmer.  State  aid  in  the 
form  of  a  direct  cash  bounty  or  subsidy  has  failed  to  achieve 
success.  State  aid  in  organizing  farmers  into  groups  for  collective 
action,  particularly  marketing  associations,  has  been  attended  by 
both  success  and  failure.  The  danger  in  state  aid  of  this  kind  is 
that  it  may  be  overdone,  especially  when  in  charge  of  an  enthusiast, 
since  farmers  are  quite  easily  led  to  form  organizations.  This  is 
particularly  true  when  little  or  no  capital  is  involved.  How- 
ever, more  and  more  experience  is  being  gained  in  this  field 
by  the  state  agencies  interested,  and  after  the  experimenting  is 
done,  doubtless  much  sound  state  aid  can  be  given  to  farmers  in  the 


REFERENCES  327 

way  of  forming  needed  organizations,  or  preventing  the  formation 
of  unnecessary  organizations. 

To  repeat  what  has  already  been  said,  state  aid  must  not  be  a 
substitute  for  self-help.  It  must  be  a  mere  temporary  way  of 
helping  the  farmer  help  himself,  of  tiding  him  over  a  difficulty 
till  he  can  take  care  of  himself. 

QUESTIONS  ON  THE  TEXT 

1.  Show  the  multipUcity  of  forms  which  state  aid  to  agriculture  takes. 

2.  Define  direct  state  aid, 

3.  Give  an  account  in  detail  of  the  Kansas  experience  in  aiding  the  following: 

silk;  beet  sugar;  woolen  mills;  flour  mills;  starch;  sod  breaking;  cheese 
factories.    Show  final  outcome  of  this  policy  of  direct  aid. 

4.  Show  in  general  the  extent  and  growth  of  state  aid  in  education. 

5.  Show  functions  of  State  Departments  of  Agriculture  under  the  police 

power. 

6.  Explain  administration  and  functions  of  Farmers'  Institutes. 

7.  Give  a  history  of  the  United  States  Department  of  Agriculture,  with 

special  reference  to  the  dates,  1839,  1862,  1889. 

8.  Name  each  Bureau  or  Division  of  the  Department  of  Agriculture  and  show 

its  main  functions. 

9.  Explain  scope  and  meaning  of  these  five  federal  acts:   Morrill  Act;  Hatch 

Act;  Adams  Act;  Smith-I^ever  Act;  Vocational  Education  Act. 

10.  Show  how  federal  aid  to  agriculture  is  extended  through  other  acts  referring 

to  good  roads  and  rural  credits. 

11.  What  has  been  the  success  of  state  aid? 

12.  Show  correct  interrelation  of  state  aid  and  self-help. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  To  what  extent  should  the  administration  of  agricultural  education  be 

centralized  at  Washington?    To  what  extent  should  extension  work  be 
controlled  by  (1)  County,  (2)  the  State,  and  (3)  the  Federal  Government? 

2.  To  what  extent  should  both  support  and  control  of  agricultural  education 

be  left  to  each  State? 

REFERENCES 

1.  Atkeson,  T.  C.:  "Semi-centennial  History  of  the  Patrons  of  Husban- 
dry."   New  York,  1916. 

2.  Bailey,  Liberty  Hyde:  "The  State  and  the  Farmer."  Presidential 
address  before  the  Association  of  American  Agricultural  Colleges  and  Experi- 
ment Stations  at  Lansing,  Michigan,  May  28,  1907.  Privately  printed,  Ithaca, 
New  York,  1907. 

3.  Boyle,  James  E.:  "The  Financial  History  of  Kansas."  Bulletin  of 
the  University  of  Wisconsin,  No.  247,  Madison,  1908. 

4.  Caffey,  Francis  G.:  "A  Brief  Statutory  History  of  the  United  States 
Department  of  Agriculture."  Cases  and  Comment,  Rochester,  New  York, 
February,  1916;  March,  1916. 

5.  Davis,  Benjamin  Marshall:  "Agricultural  Education  in  the  United 
States."    Chicago,  1912. 

6.  "Farmers'  Institutes — A  Historical  Sketch  of."  Yearbook  of  Agricul- 
ture, Washington,  1903,  pp.  149-159. 

7.  "Federal  Board  for  Vocational  Education,"  Washington.  First  Annual 
Report,  1917.    Later  reports  annually. 


328  STATE  AID 

8.  "Industrial  Commission  Report,"  Vol.  10,  pp.  ccclxviii-ccclxxx;  Vol. 
19,  pp.  193-200. 

9.  International  Institute  of  Agriculture,  Rome.  The  following  three 
monthly  bulletins,  published  by  the  Institute  contain  information  on  the 
subject  of  this  chapter.  1.  "International  Crop  Report  and  Agricultural 
Statistics."  2.  "International  Review  of  the  Science  and  Practice  of  Agri- 
culture."   3.  "International  Review  of  Agricultural  Economics." 

10.  "The  Experiment  Station  Record,"  published  monthly  by  the  Depart- 
ment of  Agriculture,  Washington.  This  is  the  best  pubhcation  deahng  with 
the  activities  of  the  various  experiment  stations.  It  also  contains  abstracts 
of  articles  deaUng  with  agriculture  pubhshed  in  all  countries. 

11.  "The  Land  Grant  of  1862  and  the  Land  Grant  Colleges,"  Bulletin  No. 
13,  Bureau  of  Education,  Washington,  1918. 

12.  Yearbook  Department  of  Agriculture:  1897—" Work  of  the  U.  S. 
Department  of  Agriculture  for  Farmers,"  59-279.  1899 — "Agricultural  Edu- 
cation in  the  U.  S.,"  157-190;  1899 — "Agricultural  Experiment  Stations  in  the 
U.  S.,"  513-548;  1903— "Farmers'  Institutes"  (historical  sketch),  149-159; 
1911 — "Some  Results  of  Farmers'  Cooperative  Demonstration  Work,"  285- 
294;  1918— "Following  the  Produce  Markets,"  277-289. 

13.  Donaldson,  T.:    "The  PubUc  Domain"  (Washington,  1884). 

APPENDIX 

Ldst  of  Publications  Issued  by  the  Department  of  Agriculture,  Washington,  D.  C. 

1.  Farmers  Bulletins — for  free  distribution. 

2.  Departmental  Bulletins — technical. 

3.  Circulars — miscellaneous  subjects. 

4.  Serials :  (a)  Journal  of  Agricultural  Research ;  (b)  Experiment  Station 
Record;  (c)  The  Monthly  Crop  Reporter;  (d)  The  Weekly  News  Letter — for 
Departm.ent  employees  and  crop  reporters;  (e)  Monthly  Weather  Review; 
(/)  National  Weather  and  Crop  Bulletin;  (g)  Snow  and  Ice  Bulletin. 

5.  Yearbook  of  Agriculture. 

6.  Market  News  Service  of  the  Bureau  of  Markets:  (a)  Reports  on  For- 
eign Markets  for  Agricultural  Products;  (b)  The  Market  Reporter;  (c)  Market 
Bulletins  (in  season)  deahng  with  fruits  and  vegetables;  {d)  Cold  Storage 
Holdings;  (e)  Live-stock  and  stock-yards  reports. 


CHAPTER  XXI 

THE  COUNTY  AGENT 

The  County  Agent  Movement. — The  most  significant  move- 
ment in  agriculture  in  America  in  the  present  generation  is  the 
County  Agent  movement.  It  is  a  movement  which  is  closest  to 
the  farmer.  It  is  a  movement  that  has  back  of  it,  in  most  cases, 
a  Farm  Bureau  composed  of  dues-paying  farmers.  The  County 
Agent  Hves  in  the  county  among  the  farmers  he  serves.  His  work 
is  therefore  responsive  to  local  needs  and  conditions,  although  done 
in  cooperation  with  distant  State  and  federal  agencies.  It  is  the 
movement  which  most  effectively  creates  agricultural  leadership, 
and  is  in  turn  directed  by  that  leadership.  And  community 
leadership  of  the  farmer,  by  the  farmer,  and  for  the  farmer  is  the 
most  vital  need  of  the  rural  community. 

Definition. — ^A  County  Agent  is  a  person  of  agricultural  educa- 
tion and  experience  employed  in  a  county  to  promote  the  general 
welfare  of  agriculture  in  that  county.  For  over  fifty  years  the 
agricultural  colleges  of  the  country  have  been  teaching  and  have 
been  conducting  experiments.  Enough  scientific  information  has 
thus  been  accumulated  to  revolutionize  agriculture  and  readjust 
rural  home  life  and  rural  community  life.  But  the  teaching  force 
and  the  printed  bulletins  proved  wholly  inadequate  to  carry  to 
the  people  themselves  this  knowledge.  The  natural  step,  therefore, 
was  to  create  an  agency  to  make  available  to  the  farmers  themselves 
the  accumulated  information  and  experience  of  the  Federal  Depart- 
ment of  Agriculture,  the  State  Departments  of  Agriculture,  the 
State  Colleges  of  Agriculture,  the  great  private  experimental 
farms,  and  the  practices  of  the  best  farmers  themselves.  Accord- 
ingly the  Federal  Department  of  Agriculture,  as  a  first  step,  under 
the  leadership  of  Dr.  Seaman  A.  Knapp,  established  throughout 
the  South  Demonstration  Agents,  to  carry  to  the  individual  farmer 
suggestions,  help,  and  advice.  These  itinerant  teachers  succeeded 
in  having  many  farmers  modify  their  farm  management  in  the 
direction  of  diversification  of  crops,  home  gardens,  deep  plowing, 
use  of  fertiUzers,  better  seed  selection,  and  better  relationships 
with  bankers  and  merchants.  What  the  individual  farmers  accom- 
plished under  this  leadership,  they  did  on  their  own  farms,  under 
their  own  conditions.     It  is  a  noteworthy  fact  that  farmers  are 

329 


330  THE  COUNTY  AGENT 

not  impressed  with  what  they  see  done  on  ''demonstration  farms," 
operated  with  pubhc  money  and  not  on  a  self-sustaining  basis.  ^ 
But  they  are  impressed  by  what  they  do  themselves.  Hence  the 
success  of  the  Demonstration  Agent  in  the  South — he  brought 
about  a  high  degree  of  self-help.  The  County  Agent  movement 
was  the  second  phase  of  this  demonstration  work,  and  soon  spread 
to  all  parts  of  the  country.  Now  there  is  one  County  Agent  in 
nearly  every  one  of  the  three  thousand  counties  of  the  United 
States.  The  Smith-Lever  Act  of  1914  strengthened  the  basis  of 
the  work  from  both  the  financial  and  the  administrative  stand- 
point. It  is  to  be  hoped,  of  course,  that  as  the  movement  strikes 
its  roots  into  the  soil,  the  central  control  from  Washington  may 
become  less  bureaucratic  and  the  local  control  may  become  more 
dominant  and  develop  more  initiative. 

Functions. — The  function  of  the  County  Agent  is  to  influence 
farmers  by  any  and  all  wise  means  within  his  power,  both  as 
individual  farmers  and  as  groups  of  farmers.  Primarily  his  aim 
is  to  increase  the  farmer's  net  income.  He  is  also  to  serve  as  a 
protector  of  the  farmer's  interests  in  all  legitimate  ways.^  In  a 
broader  and  more  social  way,  he  is  to  elevate  and  dignify  country 
life  and  make  it  more  worth  while  (Fig.  67). 

Farm  Bureau  Defined. — ^A  definition  of  a  Farm  Bureau  formu- 
lated by  the  States  Relation  Service,  although  a  lengthy  one,  is  yet 
a  comprehensive  statement  of  the  functions  of  such  a  bureau. ^ 
It  runs  as  follows: 

"A  County  Farm  Bureau  is  an  association  of  people  interested  in  rural 
affairs,  which  has  for  its  objects  the  development  in  a  county  of  the  most 
profitable  and  permanent  sj'^stem  of  agriculture,  the  estabhshment  of  commun- 
ity ideals,  and  the  furtherance  of  the  well-being,  prosperity,  and  happiness 
of  the  rural  people,  through  cooperation  with  local,  State  and  national  agencies 
in  the  development  and  execution  of  a  program  of  extension  work  in  agriculture 
and  home  economics." 

1 A  County  Agent  in  Clay  County,  Minnesota  was  approached  by  a 
creamery  promoter,  and  offered  four  hundred  dollars  for  his  support  in  foisting 
a  creamery  on  a  non-dairy  community.  The  County  Agent  advised  the  farmers 
not  to  organize  the  creamery,  and.  his  advice  was  followed. 

A  County  Agent  in  Lee  Coimty,  Illinois,  was  asked  by  a  farmer  concerning 
the  merits  of  a  patent  oats-smut  treatment  being  sold  by  a  soHcitor.  The 
County  Agent  advised  that  the  "patent  treatment"  cost  five  times  as  much  as, 
and  required  twice  the  work  of  the  simple  formaldehyde  treatment,  with  no 
better  results. 

Fake  schemes  are  becoming  difficult  to  work  among  farmers,  now  that  the 
County  Agent  has  the  agricultural  forces  mobilized  for  protection  against 
frauds  and  fakes. 

2  Circular  13,  Office  of  Extension  Work,  North  and  West,  States  Relation 
Service,  January,  1919. 


FARM  BUREAU  DEFINED 


331 


The  Farm  Bureau,  as  defined  in  this  manner,  is  the  usual  form 
of  organization  through  which  the  County  Agent  functions.  The 
Farm  Bureau  is  composed  of  the  representative  farmers  of  the 
county,  and  contains,  under  favorable  conditions,  from  50  to  100 
per  cent  of  the  farmers  of  the  county  in  its  membership.  Member- 
ship dues  are  paid  annually,  ranging  from  one  dollar  to  ten  dollars 
per  member.  It  is  to  be  hoped  that  this  local  support  will  steadily 
increase  in  volume.  The  Farm  Bureau  adopts  a  definite  community 
program  and  appoints  necessary  committees  to  effectuate  the  plans. 
The  Farm  Bureau  is,  therefore,  a  local  institution,  organized  by 


"' ;  f^%H^M^"^ 


Fig.  67. — County  agent  and  a  farmer  in  conference  in  the  field.    Shows  tractor  attached  to 
spring-tooth  harrows  in  the  background,  Montgomery  County,  Md.    (U.  S.  D.  A.) 

the  people  of  the  county.  The  Farm  Bureau  plan  enables  the  com- 
munity to  carry  out  a  wider  program  of  community-effort  than 
did  the  organized  demonstration  work  in  the  South.  The  Board 
of  Directors  of  the  Farm  Bureau  chooses  and  appoints  the  Coimty 
Agent  and  fixes  his  salary.  The  County  Agent  thus  chosen  must 
be  approved  by  the  State  College  of  Agriculture  {i.e.,  State  Director 
of  County  Agents),  if  the  Farm  Bureau  wishes  to  receive  a  share 
of  the  State  and  federal  moneys  for  this  form  of  extension  work. 
A  wide-spread  popular  error  concerning  the  County  Agent  was 
that  his  job  was  to  give  advice  to  the  farmer.  And  since  the 
County  Agent  is  frequently  more  youthful  than  the  farmer,  this 
view  of  his  functions  was  discouraging.     The  State  Director  of 


332  THE  COUNTY  AGENT 

Farm  Bureaus  for  New  York  State  stated  the  functions  of  the 
Farm  Bureaus  to  be,  in  the  order  of  their  importance,  as  follows: 

1.  The  federation  of  all  the  existing  agricultural  forces  and  organizations 
in  the  county  to  a  common  purpose  {i.e.,  schools,  local  granges,  clubs, 
societies,  etc.). 

2.  Agricultural  leadership  in  its  broad  sense. 

3.  Organization  of  associations  for  better  methods  of  production  (e.g., 
cow  testing,  seed  improvement,  etc.). 

4.  Organization  of  marketing  associations  for  both  buying  and  selling.   ;^ 

5.  The  study  of  local  economic  needs  of  the  county,  that  correct  farni 
management  practices  may  be  demonstrated  and  introduced. 

6.  The  giving  of  personal  advice  to  farmers.  This  is  last  and  least 
important. 

7.  General — "All  these  functions  should  be  exercised  with  the  point  of 
view  of  increasing  the  financial  profitableness  of  farming  within  the  county 
by  increasing  the  net  income  of  farmers,  and  of  making  country  life  and  work 
increasingly  worth  while  in  the  larger  sense."  ^ 

These  functions  of  the  Farm  Bureau  are,  strictly  speaking,  th6 
functions  of  the  County  Agent,  since  he  is  the  agent  of  the  Bureau. 

Finances. — The  County  Agent  work  is  financed  through  three 
sources — ^federal,  State  and  local.  The  local  money  comes  in  the 
form  of  dues  from  members  of  the  Farm  Bureau  and  from  a  tax 
on  the  property  in  the  county.  The  State  usually  raises  a  fund 
for  this  work  by  a  tax.  The  Federal  Government,  through  its  taxing 
powers,  collects  funds  which  are  apportioned  to  the  States  on  a 
basis  of  the  rural  population  of  the  State.  The  Smith-Lever  Act 
made  the  flat  appropriation  of  $10,000  per  annum  to  each  State. 
After  the  fiscal  year  1915-1916  the  grant  under  this  act  increases 
annually  up  to  the  year  1923,  the  maximum  for  that  year  and 
each  year  thereafter  being  a  total  of  $4,580,000.  All  grants  above 
the  first  $10,000  must  be  duplicated  by  the  State,  in  order  to  entitle 
the  State  to  receive  the  federal  grant.  The  table  in  the  appendix 
to  this  chapter  shows  the  significance  of  these  financial  terms.      .^ 

The  cost  of  the  County  Agent  to  any  individual  farmer  is  but* 
a  small  amount — a  few  dollars  at  most.  Compared  with  what  a 
laborer  pays  in  annual  dues  to  his  union,  the  average  farmer  is 
contributing  lightly  to  his  Farm  Bureau. 

Growth  of  the  Farm  Bureau. — The  very  rapid  spread  of  the 
Farm  Bureau  through  the  North  and  the  West  is  shown  by  the 
following  figures: 

Dec.     1,  1916 287  Farm  Bureaus 98,654  members 

Dec.     1,  1917 384  Farm  Bureaus 161,391  members 

June  30,  1918 791  Farm  Bureaus 290,000  members 

3  Burritt,  M.  C,  The  County  Farm  Bureau  Movement  in  New  York  State. 
Circular  93,  Department  of  Agriculture,  Albany,  New  York,  1914,  p.  12. 


SOME  DIFFICULTIES  AHEAD  333 

On  the  last  date  named  above  29  of  the  33  northern  and  western 
States  were  organized  on  the  Farm  Bm-eau  Plan. 

Home  Bureaus. — The  extension  work  in  home  economies  has 
taken  on  such  importance  that  it  has  gained  recognition  as  being 
coordinate  with  the  Farm  Bureau.  The  situation  is  met  by  expand- 
ing the  Farm  Bureau  to  include  home  demonstration  work,  the 
representatives  of  the  home  economics  work  being  added  to  the 
executive  committee  of  the  bureau.  These  representatives  are 
influential  farm  women  of  the  country,  qualified  for  the  work  by 
their  education,  experience,  and  personality. 

Boys'  and  Girls'  Club  Work. — A  prominent  place  is  now  uni- 
versally given  to  the  work  of  boys'  clubs  and  girls'  clubs.  A  county 
representative  of  this  club  work,  qualified  by  capacity  for  leader- 
ship, now  has  a  place  in  ^the  organization  of  the  Farm  Bureau 
in  many  States.  In  other  words,  the  Farm  Bureau  program  is 
easily  expanded  beyond  the  purely  agricultural  phases  of  the 
subject,  so  as  to  include  home  demonstration  and  boys'  and  girls' 
club  work. 

Some  Difficulties  Ahead. — The  County  Agent  movement,  in 
striving  for  "better  farming" — that  is,  a  greater  production — will^ 
have  the  hearty  cooperation  of  the  various  interests  of  the  county — 
mercantile,  banking,  transportation,  etc.  The  same  is  true  of 
work  for  better  roads,  better  schools,  better  rural  life  conditions. 
However,  in  the  field  of  buying  and  selling,  the  County  Agent  is 
likely  to  come  into  direct  competition  with  certain  interests 
already  more  or  less  well  established.  The  pressure  is  so  great  on 
the  County  Agent  to  ''do  something"  for  the  farmer  in  the  field 
now  occupied  by  the  over-berated  ''middleman,"  that  many 
County  Agents  are  driven  to  their  wits'  end.  Cooperative  buying 
and  selling  enterprises  form  a  legitimate  and  desirable  field  for 
farm  activity,  and  in  many  instances  have  achieved  conspicuous 
success.  However,  the  death-rate  of  these  enterprises  is  so 
high  that  the  County  Agent  should  proceed  with  caution  in 
starting  new  ones.  He  ought  to  be  reasonably  assured  in  ad- 
vance of  the  real  need  of  the  new  undertaking,  that  the  enter- 
prise will  have  a  large  enough  volume  of  business  to  make 
it  worth  while,  that  ample  capital  will  be  forthcoming  to  finance 
it  in  a  purely  business-like  way,  and  that  an  able  and  honest  mana- 
ger is  in  sight  to  conduct  the  business  through  all  the  severe 
trials  ahead  of  it  (Fig.  68). 

Pressure  is  also  brought  to  bear  on  the  County  Agent  to  give 
marketing  advice  which  is,  in  fact,  the  forecasting  of  prices.    Since 


334 


THE  COUNTY  AGENT 


no  one  has  yet  been  able  to  forecast  price,  the  County  Agent  will 
be  wise  not  to  attempt  it. 

The  County  Agent  is  also  under  pressure  to  do  actual  marketing 
woik  lor  his  clients — to  sell  their  goods  for  them  or  to  buy  their 
supplies.  This  is  a  prostitution  of  his  functions,  for  he  is  there  to 
teach  self-help,  not  to  do  the  farmers'  work  for  him.  The  end  of 
such  a  course  is  disaster. 

The  agent  will  give  all  possible  market  information  within 
his  power,  and  direct  the  farmer  to  the  various  trade  papers, 
to  the  federal  and  State  market  reports,  and  other  sources  of 


Fig.  GS. — INlarkcting  wool.     Cooperative  wool  associations  are  formed  by  the  County  Agent. 

(U.  S.  D.  A.) 

information,  and  then  he  will  let  the  farmer  decide  for  himself 
how  and  when  he  shall  use  this  information.  In  most  cases  of 
this  kind,  the  daily  market  reports  issued  free  by  the  United  States 
Bureau  of  Markets  will  meet  the  farmer's  need  of  up-to-date 
market  news  service. 

The  Middleman  Question. — One  neglected  phase  of  ''coopera- 
tion" may  well  receive  the  attention  of  the  County  Agent.  In 
many  cases  farmers  organize  and  bunch  their  buying  or  selling 
power,  and  hire  one  of  their  own  number  as  manager.  It  would 
be  equally  cooperative,  in  many  such  cases,  if  these  bunched, 
buying  or  selling  orders  were  turned  over  to  some  established  dealer 
whose  services  and  charges  were  deemed  fair  and  satisfactory. 

So  much  fiction  has  been  written  about  the  farmers'  35-cent 


REFERENCES  335 

dollar  that  rather  extravagant  hopes  have  been  created  in  the 
breasts  of  farmers  for  reducing  the  ''toll  of  the  middleman."  For 
the  middleman,  like  the  farmer,  is  working  under  competitive 
conditions,  where  easy  and  big  gains  are  rare  indeed,  and  where 
losses  and  failures  are  frequent.  Hence,  as  stated  above,  the 
County  Agent  ought  to  proceed  with  caution  in  making  farmers 
''their  own  middlemen." 

QUESTIONS  ON  THE  TEXT 

1.  Why  is  the  County  Agent  movement  the  most  significant  movement  in 

American  Agriculture  in  this  generation? 

2.  Define  County  Agent:    Show  the  need  of. 

3.  Trace  the  origin  and  growth  of  this  movement. 

4.  What  are  the  functions  of  a  County  Agent? 

5.  Give  examples  of  farmers'  interests  being  protected  by  County  Agent. 

6.  Define  Farm  Bureau. 

7.  Show  the  advantage  of  the  Farm  Bureau  plan  over  the  original  demonstra- 

tion work  plan. 

8.  How  are  County  Agents  chosen?    How  supported? 

9.  According  to  Mr.  Burritt  what  are  the  functions  of  a  Farm  Bureau,  in  the 

order  of  their  importance? 

10.  Explain  the  Home  Bureau  movement. 

11.  Discuss  the  Boys'  and  Girls'  Club  work. 

12.  What  are  some  of  the  difficulties  ahead  of  the  County  Agents? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  What  should  be  the  annual  membership  dues  in  a  Farm  Bureau?    State 

reasons  for  and  against  $1  dues;  same  for  $10  dues. 

2.  What  is  the  ideal  method  of  financing  the  County  Agent  movement? 

3.  In  what  manner  can  a  County  Agent  secure  a  greater  degree  of  cooperation 

between  the  agricultural  and  the  other  interests  of  his  county? 

REFERENCES 

1.  Burritt,  M.  C:  "A  Community  Farm  Expert  at  Work  and  What  He 
Has  Done — The  Organization,  Methods  of  Work  and  the  Results  Obtained 
by  the  Farm  Bureau  at  Binghamton,  Broome  County,  New  York,  in  Eighteen 
Months  of  Work — All  Interests  Working  Together—Great  Value  to  the  Com- 
munity— Lessons  to  be  Learned  from  this  Successful  Example."  Tribune 
Farmer,  New  York,  October  17,  1912. 

2.  Burritt,  M.  C:  "The  Farm  Bureau  Movement  in  New  York  State." 
Circular  93,  State  Department  of  Agriculture,  Albany,  1914. 

3.  Crocheron,  B.  H.:  "The  County  Farm  Adviser."  Circular  133, 
University  of  Cahfornia,  College  of  Agriculture,  Berkeley,  July,  1915. 

4.  "Farm  Bureaus  and  County  Agricultural  Agents."  Bulletin  Massa- 
chusetts Agricultural  College,  Amherst,  October,  1914, 

5.  Simons,  L.  R.:  "Organization  of  a  County  for  Extension  Work — The 
Farm  Bureau  Plan."  Circular  13,  States  Relation  Service,  Department  of 
Agriculture,  Washington,  January,  1919. 

6.  Bulletin  60,  Department  of  Agriculture,  Albany,  June,  1914.  Burritt, 
M.  C:  "The  County  Farm  Bureau  Movement  in  New  York  State."  pp. 
1594-1604.  Robertson,  F.  E.:  "A  Brief  Outline  of  the  Jefferson  County 
Farm  Bureau  Work,"  pp.  1604-1611. 


336 


THE  COUNTY  AGENT 


APPENDIX 

AmourUs  of  Federal  Funds  Available  to  the  Several  States  Under  the  Smith- 
Lever  Act. 


Per  cent  that 

rural 

population  of 

state  bears  to 

total  rural 

population  * 

1916-17 

1917-18,  1918- 

19,  1919-20* 

1920-21 

1921-22 

1922-23 
and  thereafter 

State 

Maximum 

amount  each 

state  is  entitled 

to  receive 

For  the  above 

fiscal  years, 
add  each  year 
the  amount 
given  below  to 
the  total  for 
the  immedi- 
ately preceding 
year 

For  fiscal  year 

1922-23 
and  thereafter 

Alabama 

3.58 
.29 

2.78 
1.84 

.80 

.232 

.213 
1.08 
4.19 

.52 
4.38 
3.16 
3.13 
2.43 
3.51 
2.35 

.731 
1.29 

.49 
3.00 
2.48 
3.22 
3.84 

.49] 
1.79 

.14 

.36 
1.28 

.57 
3.90 
3.82 
1.04 
4.26 
2.71 

.741 
6.15 

.04 
2.61 
1.03 
3.53 
5.99 

.41 

.38 
3.21 
1.09 
2.01 
2.69 

.21 

$49,404 
13,147 
40,580 
30,236 
18,789 
12,563 
12,347 
21,898 
56,151 
15,702 
58,184 
44,729 
44,456 
36.686 
48,660 
35,839 
18,047 
24,203 
15.374 
43,005 
37,315 
45,438 
52,232 
15,412 
29,668 
11,529 
13,909 
24,043 
16,259 
52,979 
52,081 
21,431 
56,855 
39,802 
18,144 
77,637 
10,402 
38,768 
21,308 
48,870 
75,945 
14,468 
14,170 
45,323 
21,958 
32,130 
39,634 
12,290 

$17,911 

1,431 

13,900 

9,198 

3,995 

1,165 

1,067 

5,408 

20,978 

2,592 

21,902 

15,786 

15,662 

12,130 

17,573 

11,745 

3,657 

6,456 

2,443 

15,002 

12,416 

16,108 

19,196 

2,460 

8,940 

695 

1,777 

6,383 

2,845 

19,536 

19,127 

5,196 

21,297 

13,547 

3,701 

30,744 

183 

13,076 

5,140 

17,668 

29,975 

2,031 

1,896 

16,056 

5,436 

10,059 

13,470 

1,041 

$156,870 

21,730 

Arkansas 

123,980 

California                    .  .  ■ 

85,424 

Colorado 

42,759 

Connecticut .          

19,554 

Delaware 

18,749 

Florida      .             

54,345 

Georgia 

182,020 

Idaho                     

31,254 

Illinois 

189,596 

Indiana             

139,442 

138,428 

Kansas      

109,466 

154,103 

Louisiana 

106,309 

39,991 

Maryland 

62,936 

30,029 

Michigan 

133,016 

IVIinnesota 

111,811 

Mississippi 

142,086 

167,411 

Montana 

30,172 

Nebraska 

83,308 

Nevada 

15,699 

New  Hampshire 

24,572 
62,341 

New  Mexico             

33,329 

New  York 

170,195 

North  Carolina 

North  Dakota 

166,846 
52,607 

Ohio                

184,640 

121,081 

Oregon.             

40,352 

262,101 

Rhode  Island 

11,497 

South  Carolina 

117,223 

South  Dakota 

52,148 

Tennessee. 

Texas 

154,878 
255,795 

Utah .  .             

26,655 

25,543 

Virginia     

141,659 

Washington 

West  Virginia 

54,571 
92,484 

W^isconsin.      .  .        .... 

120,454 

18,541 

99.988 

$1,580,000 

$500,000 

$4,580,000 

*  Figures  after  1920  subject  to  returns  of  Fourteenth  Census  on  rural  population. 


CHAPTER  XXII 

THE  GRAIN  TRADE 

International  Nature  of  the  Question. — The  grain  trade  of  the 
United  States  is  not  a  national  matter ;  it  is  an  international  matter. 
This  is  true  for  two  reasons.  The  grain  crop  of  foreign  countries 
affects  the  prices  received  by  the  American  farmer.  Likewise, 
the  crop  of  the  United  States  affects  the  price  received  for  grain 
by  the  foreign  grower.  For  instance,  the  year  1915  was  known 
as  the  bumper  wheat  crop  year  in  the  United  States,  the  yield 
jiunping  to  the  unheard  of  figure  of  over  one  billion  bushels.  It 
was  a  season  of  prosperity  for  the  American  wheat  grower.  But 
the  international  aspect  of  this  question  is  apparent  when  we  turn 
to  our  competing  neighbor  in  the  South — ^Argentina.  Our  Daily 
Consular  and  Trade  Reports  of  September  6,  1916,  tell  the  follow- 
ing brief  and  significant  story: 

"  Investigation  of  Grain  Markets  in  Argentina." — "The  Argentine  Gov- 
ernment recently  appointed  a  commission  to  make  an  investigation  of  grain 
markets,  with  a  view  to  protecting  the  interests  of  domestic  growers  and  ship- 
pers. The  report  of  this  commission,  as  quoted  in  a  recent  number  of  the 
Revista  Financiera  y  Comercial,  showed  that  the  present  low  price  of  wheat  in 
Argentina  is  due  chiefly  to  the  extraordinarily  large  world  production  of  wheat 
in  the  1915-16  crop  year.  North  America  alone  is  able  to  supply  nearly  aU 
the  wheat  needed  in  Europe,  and  the  difference  in  freight  does  not  permit 
Argentina  to  compete  advantageously  in  this  trade.  The  present  wheat 
supply  of  Argentina  is  estimated  at  1,500,000  tons,  which  is  gradually  being 
marketed." 

This  quotation  illustrates  the  situation.  A  brief  study  of 
statistics  makes  the  question  yet  clearer.  Note,  for  instance,  the 
world  wheat  crop — when  it  is  harvested,  where  it  is  harvested, 
the  quantity  of  it,  the  shortage  in  some  sections  and  the  surplus 
in  others,  and  the  consequent  exportation  and  importation  move- 
ments. Since  both  acreage  and  yield  fluctuate  widely  from  year 
to  year,  a  table  of  facts  of  the  above  kind  must  represent  only 
general  average  conditions.  However,  such  a  table  is  interesting 
and  is  worth  while.  Consequently  such  a  table  is  herewith  pre- 
sented, for  the  convenience  of  the  reader. 

Wheat,  as  the  following  table  shows,  is  being  harvested  some 
place  every  month  of  the  year. 

Among  all  agricultural  crops  of  the  United  States,'  corn  is  first 
in  value,  as  is  suggested  by  the  popular  expression  ''Corn  is  King." 
22  337 


338 


THE  GRAIN  TRADE 


World's  Wheat  Harvest;  Where  and  When  Harvested;  Quantity  (In  Busiiels) 


Month 


Country 


Average 
crop 


Surplus 
exported 


Imported 


Jan. 


Feb. 
Mar. 

April 


May 
June 

July 


Aug. 


Sept. 


Oct. 

Nov. 


Dec. 


Australia  and  New  Zealand 

Chile 

Argentina^— continued 

Upper  Egypt 

Lower  Egypt 

India 

Syria,  Cyprus,  Persia,  Asia  Minor.  .  . 
Arabia 

Mexico 

Cuba 

Algeria  and  Tunis 

China 

Japan 

United  States 

Greece 

Italy 

Spain 

Portugal 

France 

Jugo  Slavia 

United  States  and  France — continued 

Roumania 

Bulgaria 

Austria 

Hungary 

Serbia 

Russia  and  Siberia 

Germany 

Switzerland 

England  (United  Kingdom) 

Czecho-slovakia 

United  States  and  Russia — continued 

Belgium 

Luxemburg 

Holland 

Denmark 

Poland 

Colombia 

Canada 

Sweden 

Norway 

Canada — continued 

Brazil 

South  Africa 

Argentina 

Uruguay 

Burmah 


140,000,000 
20,000,000 


40,000,000 


325,000,000 
L50,000,000 


10,000,000 


40,000,000 


28,000,000 

750,000,000 

6,000,000 

175,000,000 

150,000,000 

8,000,000 

300,000,000 

20,000,000 

80,000,000 

40,000,000 

40,000,0001 

200,000,000  J 

10,000,000 

850,000,000 

150,000,000 

4,000,000 

60,000,000 

10,000,000 

8,000,000 

500,000 

4,000,000 

6,000,000 

10,000,000 

1,000,000 

200,000,000 

9,000,000 

350,000 


6,000,000 

175,000,000 

10,000,000 

200,000 


50,000,000 
3,000,000 

10,000,000 

55,000,000 
10,000,000 


150,000,000 


5,000,000 

52,000,000 
10,000,000 

1,000.000 


150,000,000 


100,000,000 


95,000,000 
2,000,000 


500,000 

1,000,000 
3,000,000 

7,000,000 

53,000,000 

4,000,000 

3,000,000 

40,000,000 


70,000,000 

19,000,000 

220,000,000 


51,000,000 


23,000.000 
7,000,000 


7.000,000 


20,000,000 
7,000,000 


It  is  usual  to  rank  cotton  as  second  in  value,  considered  from  the 
standpoint  of  the  farm  value  of  the  crop;  on  this  basis  hay  is  third 
and  wheat  is  fourth;  oats  are  fifth. 

The  brief  table  presented  below  shows  the  farm  values  for  ten 
years  of  the  five  leading  farm  crops. 

Corn  from  the  marketing  standpoint  lacks  the  importance  of 
wheat,  since  it  does  not  figure  largely  in  our  exports,  and  since  it 
is  so  largely  consumed  on  the  farm.  Wheat  of  necessity  must 
largely  leave  the  farmers'  hands.  And  although  many  writers 
and  speakers  have  been  announcing  yearly,  since  1870,  that  we 
are  approaching  a  wheat  famine,  that  we  have  at  last  arrived  at 


COMPETITIVE  NATURE  OF  GRAIN  TRADE 


339 


Farm  Values  of  Five  Leading  Crops,  Ten  Years 

(From  United  States  Yearbook  of  Agriculture). 


Corn 

Cotton 

Hay 

Wheat 

Oats 

1918 

$  3,528,000,000 

$1,616,000,000 

$1,524,000,000 

$1,875,000,000 

$1,092,000,000 

1917 

3,920,000,000 

1,566:000,000 

1,424,000,000 

1,278,000,000 

1,061,000,000 

1916 

2,281,000,000 

1,122,000,000 

1,023,000,000 

1,020,000,000 

656,000,000 

1915 

1,723,000,000 

631,000,000 

914,000,000 

942,000,000 

560,000,000 

1914 

1,722,000,000 

549,000,000 

779,000,000 

879,000,000 

499,000,000 

1913 

1,692,000,000 

863,000,000 

797,000,000 

610,000,000 

440,000,000 

1912 

1,520,000,000 

817,000,000 

857,000,000 

555,000,000 

452,000,000 

1911 

1,565,000,000 

688,000,000 

785,000,000 

543,000,000 

415,000,000 

1910 

1,385,000,000 

820,000,000 

842,000,000 

561,000,000 

408,000,000 

1909 

1,477,000,000 

698,000,000 

722,000,000 

669,000,000 

405,000,000 

Totals 

$20,813,000,000 

$9,370,000,000 

$9,667,000,000 

$8,932,000,000 

$5,988,000,000 

the  point  when  '^production  and  consumption  look  each  other  in 
the  face,"  that  we  can  no  longer  export,  yet,  in  the  face  of  all  of 
these  dire  predictions,  the  exports  of  wheat  during  the  last  ten 
years  greatly  exceed  the  amount  of  wheat  exports  during  any 
other  ten  years  in  our  history.  When  such  distinguished  scholars 
as  Liebig  and  Sir  William  Crookes  err  greatly  in  their  attempts  to 
forecast  future  wheat  conditions,  who  would  dare  attempt  to  say 
what  the  next  ten  years  may  bring  forth?  ^ 

Competitive  Nature  of  Grain  Trade. — The  United  States 
Department  of  Labor  has  for  many  years  made  a  study  of  food 
prices,  in  order  to  know^  what  the  consumer's  dollar  is  able  to 
purchase.  A  study  was  made  by  this  Department  into  ''Wheat 
and  Flour  Prices  from  Farmer  to  Consumer."  ^  The  investigator 
was  impressed  with  the  highly  competitive  nature  of  the  business 
in  this  field.    He  expressed  his  findings  in  these  words: 

"  In  a  survey  of  the  distribution  of  wheat  and  flour,  three  things  are  notice- 
able: The  intensely  competitive  character  of  the  business,  the  excess  in  the 
equipment  for  distribution,  and  the  desire  for  independence  of  the  people 
engaged  in  production  and  distribution.  If  one  farmer  wiU  not  seU  his  wheat 
at  the  price  offered,  another  farmer  will  .  .  .  Beginning  with  production, 
there  are  more  seeding  and  harvesting  machines  in  the  hands  of  farmers  than 
would  be  needed  if  there  were  cooperation  in  production  and  each  machine 
kept  in  operation  the  entire  harvest  season.  There  are  more  elevators  in  the 
wheat  area  than  are  needed,  each  operating  most  of  the  time  on  less  than 
full  capacity.  In  some  sections  there  is  useless  dupUcation  of  railway  trackage. 
More  grain  jobbers  and  commission  men  are  in  the  field  than  can  find  continu- 
ous business.  It  is  asserted  that  the  mills  of  the  United  States  could  grind 
all  the  wheat  raised  in  the  United  States  in  144  days  (24  hours  per  day)." 

1  Crookes,  Sir  Wilham,  The  Wheat  Problem.  New  York  and  I^ondon, 
1900.  Same  (3d  Edition),  1917.  Conrad,  Dr.  J.  Liebig's  Ansicht  von  der 
Bodenerschopfung  und  ihre  geschichtUche,  statistische  und  i;ational  okono 
mische  Begriindung.    Kritisch  gepriift.    Jena,  1864. 

2  Bulletin  130,  United  States  Department  of  Labor;  Bureau  of  Labor 
Statistics,  Washington,  August  15,  1913,  p.  14. 


340  THE  GRAIN  TRADE 

Competition. — It  is  true  that  the  whole  grain  trade  (as  well  as 
the  wheat  trade)  is  one  of  fierce  competition  and  narrow  margins. 
It  is  a  trade  of  many  ''middlemen,"  each  taking  a  small  margin, 
rather  than  a  few,  powerful,  dominating  middlemen  taking  a  big 
toll.  Competing  farmers  deal  with  competing  country  elevators. 
And  country  elevators  ship  to  competing  mills  or  to  competing 
terminal  markets.  A  partial  list  of  the  various  grain  exchanges, 
given  below,  indicates  the  real  nature  of  this  competition  for  the 
farmers'  grain. 

Chicago  Board  of  Trade  Louisville  Board  of  Trade 

Minneapolis  Chamber  of  Commerce  Memphis  Merchants'  Exchange 

Duluth  Board  of  Trade  Houston  Grain  and  Hay  Exchange 

Omaha  Grain  Exchange  Topeka  Board  of  Trade 

Kansas  City  Board  of  Trade  Wichita  Board  of  Trade 

St.  Louis  Merchants'  Exchange  Sahna  (Kansas)  Board  of  Trade 

Milwaukee  Chamber  of  Commerce  Hutchinson  (Kansas)  Board  of  Trade 

Toledo  Produce  Exchange  Oklahoma  City  Board  of  Trade 

Buffalo  Corn  Exchange  Enid  (Oklahoma)  Board  of  Trade 

Philadelphia  Commercial  Exchange  Denver  Grain  Exchange 

New  York  Produce  Exchange  Sioux  City  Grain  Exchange 

New  Orleans  Board  of  Trade  Superior  (Nebraska)  Board  of  Trade 

Cleveland  Grain  and  Hay  Exchange  Cairo  Board  of  Trade 

Cincinnati  Chamber  of  Commerce  Peoria  Board  of  Trade 

Baltimore  Chamber  of  Commerce  Wichita  Merchants'  Exchange 

Boston  Chamber  of  Commerce  Seattle  Board  of  Trade 

Indianapolis  Board  of  Trade  Lincoln  Grain  Exchange 

Little  Rock  Board  of  Trade  Des  Moines  Board  of  Trade 

St.  Joseph  (Missouri)  Grain  Exchange  Tacoma  Grain  Exchange 

Atchison  Board  of  Trade  Los  Angeles  Grain  Exchange 

Ft.  Worth  Grain  and  Cotton  Exchange 

No  one  market  and  no  one  class  of  dealers  dominate  the  grain 
trade,  although  Chicago  is  our  largest  grain  market,  and  the  millers 
and  terminal  elevator  interests  are  the  largest  buyers.  Where, 
for  instance,  will  the  corn  be  sold  that  is  in  a  country  elevator  in 
central  Iowa?  The  elevator  manager  receives  his  daily  price  cards, 
or  market  letters  from  the  nearby  terminal  markets,  namely, 
Chicago,  Kansas  City,  Omaha,  and  Minneapolis.  He  also  receives 
market  quotations  from  the  important  interior  markets,  such  as 
Cedar  Rapids,  Des  Moines,  Sioux  City.  He  has  the  opportunity 
to  consign  his  grain  to  the  large  terminals,  and  receive  what  the 
market  will  give  when  the  grain  arrives ;  or  he  may  ship  to  any  one 
of  several  buyers  who  send  him  ''To  arrive"  bids,  that  is,  a  definite 
bid  as  to  price  and  as  to  time  of  shipment.  His  grain  may  go  to  a 
nearby  Iowa  cattle  feeder.  Or  a  Kansas  City  house,  specializing 
in  corn,  may  buy  the  corn  to  ship  to  Maple  Hill  or  Peabody, 


PRESENT  ORGANIZATION  OF  THE  GRAIN  TRADE       341 

Kansas,  important  stock  feeding  centei's.  Or  a  private  wire  house 
in  Chicago  (that  is,  a  large  grain  concern  having  its  own  leased 
telegraph  lines)  may  want  to  buy  the  corn  for  a  customer  operating 
a  feed  mill  in  Montpelier,  Vermont.  Or  a  Sioux  City  grain  broker 
may  bid  for  it  for  a  South  Dakota  customer.  Or  a  broker  at  Fort 
Worth  or  a  Terminal  Elevator  in  Kansas  City  may  bid  on  it  for 
the  purpose  of  shipping  to  Galveston  to  complete  a  cargo.  Or  a 
member  of  the  Denver  Grain  Exchange  may  have  a  telegram  from 
a  customer  in  Petaluma,  California  (a  dealer  in  poultry  feeds), 
asking  for  corn,  and  this  Denver  dealer  orders  the  Iowa  corn 
shipped  to  the  California  customer.  This  is  a  fair  picture  of  what 
actually  happens,  in  the  course  of  time,  in  the  corn  belt.  The 
actual  flow  of  grain  fluctuates  greatly  from  year  to  year,  depending 
largely  on  local  crop  yields.  One  thing  is  constant,  however, 
namely,  the  competition  for  the  farmer's  grain,  competition  among 
the  various  markets,  and  competition  among  the  different  indus- 
tries that  use  grain.  Thus;  one  manufacturer  of  corn  products  in 
Chicago  uses  annually  30,000,000  bushels  of  corn,  and  there  are 
several  manufacturers  of  corn  products  on  this  market.  The 
manufacturers  of  rolled  oats  in  its  various  forms  use  an  increasing 
amount  of  oats  for  human  food.  So  also  with  the  various  wheat 
products  breakfast  foods.  The  mills,  the  industries,  the  exporters, 
are  all  after  a  supply  of  grain,  and  are  willing  to  bid  the  price  which 
will  keep  their  plants  busy  and  their  orders  filled.  And  the  extent 
of  their  orders  depends  in  turn  upon  the  volume  the  consumer  is 
willing  to  take  and  pay  for.  It  is  apparent  to  everyone  studying 
the  grain  market  that  the  underlying  forces  of  demand  and  supply 
are  ever  present,  and  finally  determine  the  flow  of  the  grain.  The 
quickness  and  the  sensitiveness  with  which  prices  constantly 
respond  to  the  ever-changing  pressure  of  supply  and  demand 
explain  the  price  fluctuations.  And  our  country  has  learned,  as 
Argentina  and  other  foreign  countries  have  learned,  that  a  big 
supply  in  our  country  must  depress  prices  in  competing  countries. 
Present  Organization  of  the  Grain  Trade. — ^The  present  organ- 
ization of  the  grain  trade  is  a  product  of  slow  evolution— a  growth, 
many  critics  say,  from  old  abuses  toward  highest  standards  of 
commercial  honor.  The  farmer  hauls  his  grain  to  the  country 
elevator  (Fig.  69),  and  this  local  elevator  is  an  institution  of  one 
of  three  classes:  (1)  Farmers'  Elevators.  In  all  the  grain  growing 
States  the  farmers  have  formed  corporations  at  the  local  shipping 
points  to  own  and  operate  grain  elevators.  These  are  generally 
called  ''cooperative  elevators,"  although  as  yet  fewer  than  half 


342 


THE  GRAIN  TRADE 


of  them  can  qualify  as  purely  cooperative  corporations.  Elevators 
of  this  kind  are  rapidly  increasing  in  numbers.  (2)  Independent 
Elevators.  Many  local  grain  dealers — usually  individuals — own 
and  operate  grain  elevators,  depending  for  their  patronage  on  their 
standing  and  reputation  in  the  community.  (3)  Line  Elevators. 
At  the  terminal  markets  are  certain  large  corporations  engaged  in 
one  or  more  branches  of  the  grain  trade,  and  corporations  of  this 
kind  often  own  and  operate  a  large  number  of  country  elevators, 
or  '4ine  elevators"  as  they  are  familiarly  called.  Line  elevator 
companies  in  the  United  States  operate  all  the  way  from  ten  to 


Fig.  69. — Country  grain  elevator  in  North  Dakota. 

six  hundred  country  houses  apiece.  Elevators  of  this  kind  are 
rapidly  decreasing  in  numbers,  being  bought  out  in  part  by  farmers' 
companies  and  in  part  by  flour  milling  corporations. 

When  the  grain  is  once  delivered  at  the  local  elevator  at  once 
there  emerge  the  problems  of  inspecting  and  grading,  financing 
and  storing,  and  of  transportation.  Since  ninety-five  per  cent 
of  the  farmers  part  with  their  grain  at  the  country  elevator  and 
receive  their  pay  in  cash,  it  is  unavoidably  necessary  for  the  man- 
ager to  grade  this  grain.  The  price  he  receives  at  the  terminal  or 
other  market  will  be  governed  by  the  grade  there.  Uniformity  of 
grain  grades  has  been  established  by  the  United  States  Grain 
Standards  Act  of  August  11,  1916.    Wheat,  for  instance,  is  divided 


THE  LOCAL  ELEVATOR  MANAGER  343 

into  classes  and  sub-classes,  and  these  again  into  grades.  The 
grade  depends  on  the  color  and  condition,  the  test  weight  per 
measured  bushel,  the  moisture  content,  on  certain  inseparable 
materials,  and  other  factors.  In  addition  to  naming  the  grade,  the 
local  manager  must  determine  the  dockage,  that  is,  the  amount 
of  foreign  matter  and  broken  kernels,  which  he  screens  out  of 
the  sample  by  putting  the  grain  over  a  sieve.  If  100  pounds 
of  grain  contains  10  pounds  of  screenings  or  dockage,  it  is 
customary  to  pay  for  the  90  pounds  of  grain  out  of  each  100 
delivered  by  the  farmer.  More  will  be  said  later  concerning  the 
dockage  problem. 

The  local  elevator  manager  may  dispose  of  his  grain  in  a  num- 
ber of  ways,  but  the  two  most  usual  practices  are  to  consign  and 
to  sell  to  arrive.  If  he  thinks  the  market  is  working  upward,  he 
consigns  to  one  or  more  commission  houses  wdth  which  he  has 
established  commercial  relations.  The  financing  of  the  grain  in 
such  a  case  is  usually  done  in  this  manner.  The  commission  house 
makes  an  advance  to  the  country  shipper  when  the  grain  starts 
to  move,  enabling  the  country  manager  to  pay  cash  for  the  farmers' 
grain.  This  loan  is  repaid  as  the  grain  is  sold  at  the  terminal.  The 
country  shipper  then  forwards  by  mail  draft  with  bill  of  lading  to 
his  consignee,  who  usually  honors  the  draft  several  days  before 
the  arrival  of  the  car,  charging  an  interest  rate  for  the  money 
advanced  as  fixed  by  the  Grain  Exchange  at  that  market.  This 
banking  function  of  the  commission  merchant  is  very  important 
in  the  markets  of  Duluth,  Minneapolis,  and  Chicago.  The 
commission  merchant  in  turn  borrows  from  this  city  bank, 
using  bills  of  lading  as  security.  To  indicate  the  importance  of 
this  kind  of  financing,  it  may  be  mentioned  that  one  Chicago 
commission  house  had  at  one  time  over  $800,000  of  borrowed 
money  advanced  to  the  country  on  consigned  grain,  none  of  which 
grain  was  yet  unloaded  at  the  terminal,  and  another  house  had 
out  $2,000,000. 

If  the  market  does  not  seem  to  be  a  rising  one,  or  if  a  temporary 
car  shortage  impends,  or  if  certain  other  conditions  prevail,  the 
local  manager  may  sell  his  grain  'Ho  arrive."  In  the  Minneapolis 
district  this  term  usually  means  to  arrive  at  Minneapolis  within 
20  days  after  acceptance  of  the  bid.  In  the  Chicago  district  the 
term  ''to  arrive"  refers  to  time  of  shipment,  and  hence  the  bids 
sent  out  from  Chicago  always  specify  time  of  shipment  as  three 
days,  ten  days,  thirty  days,  ninety  days,  and  so  on.  The  local 
shipper,  when  he  accepts  the  to-arrive  bid,  has  his  grain  sold  at  a 


344  THE  GRAIN  TRADE 

definite  price.  He  then  has  no  further  interest  in  price  fluctuations, 
so  far  as  this  grain  is  concerned. 

The  country  shipper  may  sell  grain  ''on  track"  terminal  mar- 
ket, by  shipping  the  grain  to  the  terminal  and  selling  it  from  a 
sample  displayed  on  the  table  on  the  trading  floor  of  the  Grain 
Exchange.  The  country  shipper  may  ship  his  grain  to  the  terminal 
and  there  have  it  stored  in  a  public  elevator.  In  this  case  it  is 
mixed  with  other  grain  of  the  same  grade — but  this  process  of 
mixing  really  began  when  the  grain  from  different  farms  was 
mixed  in  the  local  elevator. 

Storage  and  Hedging  Problems  of  Country  Elevator. — Grain, 
particularly  wheat,  is  commonly  hurried  to  the  elevators  soon 
after  thrashing.  The  farmer  has  the  privilege  of  storing  his  grain 
in  the  local  elevator,  if  he  so  elects,  taking  therefore  warehouse 
receipts  commonly  in  the  form  of  * ''storage  tickets."  The  local 
elevator,  holding  from  25,000  to  35,000  bushels  (on  the  average) 
soon  fills  up  with  grain,  a  part  of  which  is  "stored  giain."  It  is 
thus  often  necessary  to  ship  out  stored  grain.  In  such  a  case  it 
is  a  common  practice  for  the  manager  to  protect  himself  against 
loss  by  hedging  such  shipments  of  stored  grain  in  the  future 
market.  He  hedges  by  buying  for  future  delivery  as  much  as 
he  has  received,  shipped  and  sold  on  the  cash  market.  He  is  now 
insured.  Then  when  the  time  comes  that  the  farmer  owning  the 
"stored  grain"  (not  in  the  elevator)  orders  it  sold,  the  future  is 
sold  out  and  the  transaction  is  closed.  Any  loss  on  the  cash  grain 
is  offset  by  a  gain  on  the  future;  any  gain  on  the  cash  grain  is 
offset  by  a  loss  on  the  fut\u*e. 

The  country  shipper,  particularly  in  the  Minneapolis  district, 
also  hedges  his  day-to-day  purchases  of  grain.  If  he  buys  5,000 
bushels  to-day,  he  orders  a  future  sold  in  the  pit  against  it.  In  a 
few  weeks  the  cash  grain  reaches  the  terminal  and  is  sold.  And 
now  the  future  is  bought  back.  Let  us  assume  that  the  cash  grain 
sells  at  a  loss  of  ten  cents  a  bushel,  owing  to  a  decline  in  the  market. 
Future  prices  usually  move  with  cash  prices.  Manifestly  the  future 
he  has  sold  at  one  price  may  now  be  bought  in  at  a  profit  of  approx- 
imately ten  cents  a  bushel,  so  that  he  has  been  insured  against 
loss  by  price  fluctuations.  The  converse  is  true,  namely,  that 
should  cash  prices  sharply  advance,  futures  would  also  advance, 
ordinarily,  so  that  he  would  realize  no  speculative  gain  by  market 
changes.  Hedging  is  insurance  against  loss  through  price  fluctua- 
tions. The  owner  of  hedged  grain  has  no  further  interests  in 
price  changes. 


THE  GRAIN  EXCHANGE  345 

The  hedging  of  grain  by  country  shippers  is  common  in  the 
North,  but  is  not  common  in  the  Kansas  City  district.  The  chief 
reasons  for  this  lack  of  hedging  in  Kansas  and  that  section  are  as 
follows:  (1)  More  grain  is  financed  locally  and  less  by  commission 
mei  chants — the  commission  merchant  requiring  hedging  and  the 
local  money  lenders  not;  (2)  More  local  mills  and  industries, 
buyers  of  grain,  are  situated  near  the  local  elevator,  so  that  the 
time  of  the  grain  en  route  is  less  and  the  risk  of  loss  consequently 
less ;  (3)  Considerable  grain  is  sold  to  arrive,  and  this  is  hedged  by 
the  terminal  buyer. 

Mixing. — As  the  grain  flows  from  the  country  elevator  to  the 
terminal  market  following  the  harvest  season — and  one-half  the 
wheat  goes  to  market  within  four  months — it  is  necessary  to  pro- 
vide storage  for  it.  Terminal  elevators  are  the  principal  buyers 
and  storers  at  this  time.  These  elevators  are  both  ''public"  and 
private,  the  ''public"  warehouses  being  houses  owned  by  private 
corporations  which  store  grain  for  the  public  at  a  regular  storage 
fee.  Private  warehouses  are  those  which  store  their  own  grain 
only.  Much  grain  which  is  wet  or  otherwise  out  of  condition  finds 
its  way  to  market.  A  class  of  private  elevators  known  as  Hospital 
Elevators  either  buy  this  grain  or  condition  it  for  their  customers 
at  certain  rates  of  compensation.  Public  elevators  are  not  per- 
mitted to  mix  grains  of  different  grades,  whereas  private  houses 
mix  their  own  grain  to  suit  themselves  and  their  customers.  Some 
private  houses  derive  considerable  income  from  buying  low-grade 
grain  and  mixing  it  with  high-grade  grain  in  such  a  way  as  to  raise 
the  grade  of  much  poor  grain.  Since  the  price  is  reflected  back  to 
the  country  when  low-grade  grain  is  bought  for  mixing  purposes, 
the  farmers  do  not  suffer  from  this  terminal  practice. 

The  Terminal  Elevators  at  all  times  have  strong  competition 
from  other  buyers,  such  as  flour  and  feed  millers,  exporters,  and 
the  industries  using  grain. 

The  Grain  Exchange. — ^At  the  larger  terminal  markets  the 
various  buyers  and  sellers  of  grain  and  the  receivers  and  shippers 
of  consigned  grain  have  associated  themselves  together  and 
formed  grain  exchanges  (Fig.  70).  These  exchanges  are  com- 
monly incorporated,  the  corporation  furnishing  a  place  to  trade, 
rules  for  trading,  and  market  information  of  every  available  kind, 
but  the  corporation  itself  doing  no  trading.  A  strict  code  of 
ethics  is  imposed  on  the  members  in  their  dealings -with  one  an- 
other and  with  the  outside  public.  A  breach  of  the  rules  is  pun- 
ished by  suspension  or  expulsion.    Applicants  for  membership  to 


346  THE  GRAIN  TRADE 

the  exchanges  are  scrutinized  carefully.  Few  farmers'  companies 
thus  far  have  sought  membership,  partly  owing  to  the  high  cost  of 
membership  and  partly  owing  to  the  present  efficient  selling 
service  rendered  by  the  commission  merchants.  The  Minneapolis 
Chamber  of  Commerce  has  three  farmer  companies  as  members. 
The  Chicago  Board  of  Trade  has  two  farmers'  companies  among  its 
membership.  The  applicant  for  membership  must  show  good 
character  and  sound  financial  standing. 

A  visitor  who  sees  for  the  first  time  the  trading  floor  of  one  of 
the  great  grain  exchanges  is  most  impressed  with  the  visible 
facilities  for  receiving  and  disseminating  market  information — 


Fia.  70. — The  exchange  floor  of  the  Chicago  Board  of  Trade,  the  principal  grain  exchange 
of  the  United  States.  Cash  grain  department  to  left;  pits  on  right.  There  are  four  pits — 
wheat,  corn,  oats  and  provisions.  Samples  are  from  the  Illinois  State  Grain  Inspection 
Department.  This  picture  was  taken  during  the  World  War,  and  shows  the  members 
pausing  at  the  noon  hour  for  a  minute  of  silent  prayer.    (Photo  by  Moulton.) 

the  scores  of  telegraph  and  telephone  instruments — the  weather 
maps  and  charts — the  blackboards  with  statistics  as  to  price  quo- 
tations in  all  large  markets,  visible  supply,  exports,  receipts  and 
shipments,  in  and  out  inspections,  grain  afloat,  and  so  on.  The 
traders  are  certainly  trading  with  their  eyes  open,  so  far  as  the 
latest  and  fullest  market  information  is  concerned.  All  exchanges 
have  strict  rules  against  spreading  rumors  and  false  reports  about 
crops  conditions  or  other  market  factors.  The  Chicago  Board 
of  Trade  has  a  standing  committee  on  Market  Reports,  and  this 
Committee  employs  an  expert — a  grain  dealer  of  long  experience — 
to  devote  his  entire  time  to  supervision  and  censorship  over 
crop  reports,  market  reports  and  market  quotations  issued  from 
that  market. 


EVOLUTION  OF  THE  ORGANIZED  GRAIN  EXCHANGE   347 

The  Farmer  and  the  Terminal  Market. — As  stated  above, 
95  per  cent  of  the  grain  reaching  the  terminal  has  already  passed 
out  of  the  possession  of  the  farmer.  An  increasing  number  of 
farmers,  however,  are  now  availing  themselves  of  the  machinery 
of  the  terminal  markets,  including  that  of  the  grain  exchange 
itself.  For  instance,  some  farmers  ship  their  grain  to  the  terminal 
elevator  and  have  it  cleaned,  and  the  dockage  eliminated,  before 
selling.  The  screenings  are  then  sold  at  their  market  value  for 
manufacture  into  stock  feeds.  A  few  farmers  use  the  futures 
market  for  disposing  of  their  crop.  Thus  in  the  fall  of  1919  many 
Iowa  and  Illinois  farmers  found  their  corn  crop  assured,  both  as 
to  quantity  and  quality,  and  the  December  contract  price,  during 
August,  a  satisfactory  price.  There  was  also  at  this  time  a  tre- 
mendous campaign  inaugurated  by  the  Federal  government  against 
the  high  cost  of  living,  and  hence,  partly  in  consequence  of  this 
campaign,  a  strong  probability  of  a  fall  in  corn  prices.  Hence  many 
of  these  farmers  sold  their  corn  for  December  delivery,  these  future 
contracts  assuring  them  of  fair  profits  on  their  crops.  Their 
judgment  proved  correct,  for  there  was  a  decline  in  com  prices 
before  the  delivery  month  arrived.  This  service  costs  the  farmer 
only  one-fourth  of  a  cent  a  bushel. 

Past  Organization  of  the  Grain  Trade. — ^The  grain  trade,  in 
common  with  other  commercial  institutions  of  America  within  the 
last  thirty  years,  has  responded  to  the  demands  for  a  higher  code 
of  business  ethics.  In  all  probability  the  practices  in  the  grain 
trade  were  no  better  or  no  worse  than  the  practices  generally 
prevailing  in  manufacturing,  transportation,  or  other  branches  of 
industry.  The  abuses  in  the  grain  trade  of  yesterday  are  so  fresh 
in  men's  minds  that  many  clever  writers  and  speakers  find  it  easy 
to  stir  up  the  farmer's  wrath  and  hot  indignation  on  this  subject. 
The  past  organization  of  the  grain  trade,  with  its  evils  laid  bare, 
is  best  traced  under  three  topics,  namely,  (1)  evolution  of  the 
organized  grain  exchanges;  (2)  evolution  of  the  terminal  elevator — 
railway  monopoly;  (3)  evolution  of  the  farmers'  elevator. 

(1)  Evolution  of  the  Organized  Grain  Exchange. — Prior  to  our 
Civil  War  grain  was  handled  very  largely  by  independent  dealers 
with  no  fixed  customs  in  the  different  markets.  Some  markets, 
for  instance,  handled  wheat  by  the  measured  bushel,  others  by 
the  weighed  bushel  (sixty  pounds).  Each  important  market,  like 
Buffalo  and  Baltimore,  had  its  own  grades.  Lack  of  transporta- 
tion facilities  made  it  difficult  to  move  grain  to  the  seaboard  from 
the  inland.    Water  routes  were  of  course  long  the  sole  means  of 


348  THE  GRAIN  TRADE 

transporting  crops  long  distances.  In  the  larger  .commercial 
centers  "Boards  of  Trade,"  as  they  were  called,  sprang  up,  to 
promote  uniformity  in  the  usages  of  merchants  and  to  improve 
and  dignify  commerce  in  general.  Few  of  these  local  boards, 
however,  survived  and  became  grain  exchanges.  The  first  and 
most  important  one  to  do  so  was  the  Chicago  Board  of  Trade  of 
1848.  It  was  ten  years  before  this  board  of  trade  became  a  grain 
exchange  in  the  modern  sense  of  the  term.  The  Chicago  Board 
of  Trade  at  once  took  up  the  fundamental  market  problems  of 
weighing,  inspecting,  and  grading  the  grain.  The  practice  of  the 
Chicago  grain  exchange  of  selling  wheat  by  weight  instead  of  the 
measured  bushel  was  forced  on  the  Buffalo  and  the  New  York 
markets.  A  system  of  weighing  was  developed  which  proved 
satisfactory  to  both  buyers  and  sellers  of  grain.  It  is  worthy  of 
note  that  while  inspection  and  grading  have  been  taken  over  by 
the  State  as  proper  functions  of  State  government  (under  Federal 
supervision),  yet  the  weighing  of  grain  on  the  Chicago  market  is 
still  done  exclusively  by  the  Board  of  Trade.  In  the  Kansas  City 
and  Minneapolis  markets,  however,  weighing  as  well  as  inspection 
is  now  a  State  function. 

Cash,  to  Arrive,  and  Futures :  Comers. — Three  forms  of  trading 
in  grain  developed  before  the  Civil  War  on  all  the  grain  exchanges, 
namely,  cash  grain,  to  arrive  grain,  and  future  trading.  Cash 
grain  or  spot  grain  means  the  grain  itself  or  a  sample  of  the  grain 
is  on  hand  when  the  trade  is  made.  Dealers  on  the  various  ex- 
changes, however,  found  it  unsatisfactory  to  depend  upon  the 
supply  of  cash  grain  to  meet  their  requirements.  Hence  contracts 
were  made  for  grain  to  be  shipped  at  certain  times  or  within 
certain  definite  periods,  and  this  form  of  dealing  came  to  be  called 
''to-arrive"  business.  As  a  natural  outgrowth  of  ''to-arrive"  trad- 
ing came  future  trading.  *'To-arrive"  contracts  were  naturally 
made  with  parties  having  grain  stored  along  the  canal  or  railw^ay. 
Before  the  Civil  War,  particularly  on  the  Chicago  market,  traders 
began  to  make  contracts  to  deliver  wheat  in  a  definite  future 
month  at  a  definite  price,  which  wheat  they  did  not  yet  own,  but 
expected  to  buy  and  dehver.  In  other  words,  they  sold  short. 
In  this  way  future  trading  started.  The  careful  students  of  this 
subject  are  convinced  that  future  trading  began  in  this  natural 
way,  as  an  outgrowth  of  to-arrive  trading,  and  in  this  manner 
served  the  interests  of  the  cash  grain  business.  The  speculators, 
however,  saw  the  possibilities  in  this  new  field,  and  proceeded  to 
prostitute  this  wholesome  form  of  trading  till  its  abuses  well-nigh 


CASH,  TO  ARRIVE,  AND  FUTURES:  CORNERS  349 

outweighed  its  uses.  During  the  Civil  War  the  Quartermaster's 
Department  of  the  Army  bought  grain  on  contracts  for  future 
dehvery,  particularly  on  the  Chicago  Board  of  Trade.  This  gave 
a  new  impetus  to  future  trading.  Following  the  War,  there  came 
a  period  of  tremendous  speculation  in  railroads,  in  lands,  and  in 
general  commodities.  The  same  wave  of  speculation  hit  the  organ- 
ized grain  exchanges,  and  future  trading  became  the  football  of 
speculators.  Ordinary  hedging  transactions  became  completely 
overshadowed  by  purely  speculative  trading.  Cornering  the 
market  became  almost  a  monthly  occurrence,  for  every  month 
in  the  year  was  delivery  month  instead  of  four  months  as  now. 
Not  till  five  years  after  the  Civil  War  did  the  Chicago  Board  of 
Trade  begin  to  make  rules  covering  future  trading  and  aiming 
to  curb  its  abuses.  This  was  the  beginning  of  a  fifty-year  fight 
against  the  two  serious  abuses  of  speculation,  namely,  manipula- 
tion of  the  market  and  corners.  The  Chicago  Board  of  Trade  (and 
the  other  exchanges  where  future  trading  is  carried  on)  f6und  it 
frankly  a  matter  of  intelligent  self-interest  to  preserve  the  benefits 
of  future  trading  and  eliminate  its  abuses.  Rules  were  gradually 
added,  increasing  the  nimiber  of  grades  deliverable  on  contract, 
so  that  corners  became  more  difficult.  Obviously  if  one  grade 
only  is  deliverable  on  a  future  contract,  cornering  is  a  compara- 
tively simple  matter.  At  the  present  time  21  grades  of  wheat  are 
deliverable  on  future  contracts  in  Chicago.  In  case  the  dehvery 
cannot  be  made,  settlement  can  be  made  at  a  fair  market  price, 
not  at  a  "fictitious"  price  due  to  the  corner.  Again,  if  the  grain 
in  the  regular  warehouses  is  held  by  the  would-be  cornerers,  de- 
liveries can  be  made  on  track  during  the  last  few  days  of  the 
delivery  month.  Again,  it  may  be  added  that  the  Supreme  Court 
of  the  United  States  has  declared  cornering  the  market  a  crime. 
Hence  the  exchanges  now  stand  ready  to  apply  the  remedy  of 
expulsion  to  any  member  guilty  of  attempting  a  corner.  As  a 
matter  of  history,  nearly  every  attempt  to  corner  the  grain  market 
was  a  failure.  Only  in  those  few  cases  where  actual  market 
shortage  was  on  the  side  of  the  cornerer  did  he  realize  a  profit. 
For  the  natural  consequence  of  accumulating  a  long  line  of  grain  in 
order  to  corner  the  market  is  to  boost  the  price  of  the  grain  bought; 
and  the  second  phase  of  the  corner — unloading  the  long  line — • 
has  the  natural  effect  of  lowering  the  price  more  than  the  buying 
had  raised  it.  As  one  trader  expressed  it,  ''It  is  easy  to  corner 
the  market,  but  it  is  hard  to  bury  the  corpse."  And  this  is  the 
reason  why  most  attempted  corners  failed.    In  the  public  memory 


350  THE  GRAIN  TRADE 

there  stand  out  three  so-called  corners,  namely,  the  Hutchinson 
corner  of  1888,  the  Leiter  corner  of  1898,  and  the  Pattern  corner 
of  1909.  The  Hutchinson  corner  was  a  genuine  corner,  his  buying 
coinciding  with  actual  market  shortage;  the  Leiter  corner  was  a 
failure,  bankrupting  Leiter  and  leading  to  his  permanent  suspen- 
sion from  the  Chicago  Board  of  Trade;  the  Pattern  corner  was  not 
a  corner,  but  an  example  of  grain  merchandising  in  accordance 
with  a  correct  market  forecast.  For  when  Mr.  Pattern  quit  the 
market,  after  his  ''May  wheat  deal,"  the  prices  continued  to  go 
up  and  stay  up  till  the  new  crop  came  in. 

Cornering  the  market,  under  the  present  rules  of^the  organized 
exchanges,  is  now  looked  upon  as  a  danger  so  slight  as  to  be  negli- 
gible.   There  have  been  no  intentional  corners  in  recent  years. 

Manipulation  of  the  market  means  causing  prices  to  rise  or  fall 
by  means  of  some  deception  usually  in  the  form  of  spreading  rumors 
and  false  market  reports.  The  rules  of  the  organized  exchanges 
in  recent  years  have  been  made  extremely  severe  in  this  matter, 
any  member  being  subject  to  discipline^and  expulsion  for  circulat- 
ing any  false  reports.  In  the  language  of  the  trade,  ''The  crop 
killer  has  been  killed  off.'' 

Corners  and  manipulations  were  extremely  common  in  the 
grain  trade  before  exchanges  were  organized,  and  for  the  first 
years  of  the  organized  exchanges.  But  the  total  effect  of  the  organ- 
ized exchanges  has  been  very  greatly  to  curtail  these  evils  in  the 
grain  trade.  Corners  and  manipulations  are  still  familiar,  how- 
ever, in  commodities  not  dealt  in  on  the  organized  exchanges. 

A  Wide  Market. — For  the  purpose  of  carrying  on  legitimate 
hedging  transactions  a  "wide"  market  is  needed,  that  is,  a  market 
with  enough  buyers  and  sellers  in  it  to  absorb  instantly  and  without 
shock  large  trades.  In  the  language  of  the  trade,  it  is  a  market 
"easy  to  get  in  and  out  of."  To  make  a  market  wide  enough  for 
hedging  every  day  in  the  year  some  speculators  are  needed.  They 
buy  till  the  regular  consumptive  buyers  are  ready  to  purchase 
their  contracts;  or  they  sell  short,  till  the  holders  of  either  cash 
grain  or  long  contracts  are  ready  to  sell  to  them,  or  till  fresh 
speculators  step  in  and  close  the  trade.  A  trader  on  the  "long" 
side  of  the  market  (a  buyer)  can  close  his  trade  in  three  ways: 
wait  till  delivery  month  and  receive  the  grain;  wait  till  delivery 
month  and  receive  a  "delivery  notice"  {i.e.,  a  notice  that  the 
grain  is  in  store  for  him,  and  a  warehouse  receipt  ready),  which 
notice  he  immediately  passes  on  to  some  other  trader  in  fulfillment 
of  a  contract,  this  delivery  notice  passing  on  from  hand  to  hand 


"PHANTOM  GRAIN"  QUESTION  351 

much  like  a  piece  of  paper  money;  or  the  buyer  may  sell  as  much 
as  he  has  bought  and  settle  by  offsetting  one  trade  against  the 
other,  merely  paying  or  receiving  the  balance  due.^ 

Scalpers. — As  a  matter  of  fact  most  speculative  trades  are 
closed  out  before  the  delivery  month  comes  around.  There  is  a 
small  class  of  speculators  who  buy  and  sell  in  the  pit  dming  the 
day  on  a  very  small  fluctuation  in  price,  but  who  aim  to  have  all 
their  trades  closed  out  by  the  time  the  market  closes.  They  are 
called  ''pit  scalpers." 

"  Phantom  Grain  "  Question. — The  speculators  and  the  scal- 
pers produce  a  large  volume  of  future  trading,  which  some  writers 
call  mere  dealing  in  "wind"  or  in  "phantom"  grain;  and  this 
"phantom  grain,"  these  same  writers  claim,  depresses  the  price 
of  actual  grain.  When  such  a  claim  as  this  is  examined  it  is  seen 
to  be  preposterous.  For  of  all  places,  the  organized  exchange  is  the 
one  center  where  accurate  market  information  is  collected  and 
disseminated,  and  this  information  fully  covers  the  visible  supply 
of  grain,  the  arrivals  on  all  big  markets,  the  amount  afloat  and  in 
elevators,  the  conditions  of  growing  crops,  and  every  other  known 
factor  of  significance  as  to  supply  or  demand.  No  speculator  is 
fooled  by  any  "phantom"  supply  of  grain,  or  he  would  be  too 
childish  a  person  to  survive  long  as  a  speculator.  Again,  since  the 
amount  of  "phantom"  grain  bought  exactly  equals  the  amount 
sold,  it  may  be  looked  on  as  a  case  of  demand  (tending  to  raise 
price)  just  as  much  as  it  is  a  case  of  supply  (tending  to  lower  price). 

^  The  use  of  delivery  notices  where  one  notice  for  5,000  bushels,  for  in- 
stance, may  settle  contracts  for  many  thousands  of  bushels,  is  very  much 
similar  to  the  use  of  money,  checks,  etc.,  in  settHng  contracts  to  pay  money. 
The  analogj'  is  very  striking.  The  following  story  illustrates  how  a  piece  of 
paper  "money"  (i.e.,  credit  money — a  promise  to  pay  money)  does  the  work 
of  real  money  (gold). 

"  Mr.  Brown,  a  Kansas  gentleman,  is  the  proprietor  of  a  boarding-house.  Around  hia 
table  at  a  recent  dinner  sat  his  wife,  Mrs.  Brown;  the  village  milliner,  Mrs.  Andrews;  Mr. 
Black,  the  baker;  Mr.  Jordan,  a  carpenter;  and  Mr.  Hadley,  a  flour,  feed,  and  lumber 
merchant.  Mr  Brown  took  a  ten  dollar  bill  from  his  pocket  and  handed  it  to  Mrs.  Brown, 
with  the  remark  that  there  was  ten  dollars  towards  the  twenty  he  had  promised  her.  Mrs. 
Brown  handed  the  bill  to  Mrs.  Andrews,  the  milliner,  saying, '  that  pays  for  my  new  bonnet.' 
Mrs.  Andrews,  in  turn,  passed  it  on  to  Mr.  Jordan,  remarking  that  it  would  pay  for  the 
carpentry  work  he  had  done  for  her.  Mr.  Jordan  handed  it  to  Mr.  Hadley,  requesting  his 
receipted  bill  for  flour,  feed,  and  lumber.  Mr.  Hadley  gave  the  bill  back  to  Mr.  Brown 
saying,  'That  pays  ten  dollars  on  my  board.'  Mr.  Brown  again  passed  it  to  Mrs.  Brown, 
remarking  that  he  had  now  paid  her  the  twenty  dollars  he  had  promised  her.  She,  in  turn, 
paid  it  to  Mr.  Black  to  settle  her  bread  and  pastry  account.  Mr.  Black  handed  it  to  Mr. 
Hadley,  asking  credit  for  the  amount  on  his  flour  bill,  Mr.  Hadley  again  returning  it  to 
Mr.  Brown,  with  the  remark  that  it  settled  for  his  month's  board;  whereupon  Brown  put  it 
back  into  his  pocket,  observing  that  he  had  not  supposed  a  greenback  would  go  so  far." 

The  greenback  may  be  presented  to  the  United  States  Treasury  and 
exchanged  for  real  money — gold. 

The  above  story  is  quoted  from  "Among  the  Humorists  and  After-dinner 
Speakers";  CoUier  &  Son,  New  York,  1909,  p.  251. 


352  THE  GRAIN  TRADE 

Speculation  and  Price  Fluctuations. — The  fact  is  that  this  spec- 
ulation is  a  factor  tending  to  put  on  brakes  when  the  market  starts 
to  bulge  or  break.  It  stabilizes.  It  lessens  the  fluctuations — 
makes  them  many  and  frequent  and  small,  rather  than  few  and 
large.  Prices  of  wheat,  for  instance,  fluctuated  much  more  on 
the  American  market  during  the  60  years  1790-1850  (when  there 
were  no  organized  grain  exchanges)  than  they  did  during  the  50 
years  of  organized  grain  exchanges  (1865-1915).  And,  as  stated 
in  the  chapter  on  speculation,  grains  subject  to  future  trading 
show  smaller  price  fluctuations  than  grains  not  subject  to  future 
trading  (Figs.  71  and  72). 

Cost  of  Future  Trading. — Future  trading  has  been  defined  as 
of  two  interrelated  and  interdependent  kinds,  hedging  and  specu- 
lation. All  persons  familiar  with  the  grain  trade  admit  the  benefits 
of  hedging,  but  many  critics  say  that  speculation  is  of  such  large 
volume  as  to  overshadow  completely  the  hedging  transactions,  and 
that  this  large  volume  of  speculative  trading  imposes  a  toll  on  the 
public  far  outweighing  the  benefits  of  hedging.  It  is  very  probable 
that  half  the  future  trading  in  grain  in  the  United  States  is  done 
on  the  Chicago  Board  of  Trade,  this  trading  representing  every 
State  in  the  Union  and  a  few  foreign  countries.  It  is  the  opinion 
of  the  writer  that  the  volume  of  future  trading  in  any  one  normal 
year  in  Chicago  amounts  to  ten  billion  bushels  of  wheat  and  ten 
billion  bushels  of  corn  and  oats  together,  a  grand  total  of  twenty 
bilHon  bushels.  The  normal  crop  in  these  grains  is  five  billion 
bushels,  that  is  each  bushel  of  cash  grain  is  bought  and  sold  four 
times  in  the  pit.  What  is  the  ''toll"  on  this  amount  of  future 
trading?  Future  trading  may  be  classified  as  of  three  kinds,  so 
far  as  costs  are  concerned,  namely,  (1)  members  trading  for  them- 
selves; no  commission  is  charged  on  this;  (2)  members  trading  for 
other  members;  the  rate  on  this  is  the  ''half  rate,"  namely,  $6.25 
for  5,000  bushels  bought  or  sold  or  both  bought  and  sold  (the 
so-called  "round  turn");  (3)  members  trading  for  non-members, 
on  which  the  rate  is  $12.50  for  5,000  bushels  round  turn.  Since 
about  one-fourth  of  the  future  trading  is  for  non-members  and 
one-fourth  for  other  members,  it  follows  that  the  total  commissions 
collected  on  a  year's  future  trading  in  wheat,  corn  and  oats  in 
Chicago  amount  to  approximately  one-third  of  a  cent  a  bushel 
"toll"  on  the  year's  crop,  not  a  very  heavy  price  for  the  insurance 
afforded  by  the  hedging,  which  is  an  integral  part  of  future  trading. 

Bucket-Shop  Fight. — The  account  of  the  evolution  of  the  organ- 
ized grain  exchange  is  not  complete  until  the  story  of  the  bucket- 


WHEAT  PITS 


353 


^. 


Fig.   71. — Wheat  pit,  Chicago  Board  of  Trade,  where  future  trading  is  carried  on. 


Fig.   72. — The  wheat  pit  during  an  exciting  moment  of  trade.     This  is  a  flashlight  taken 
during  an  actual  period  of  trading,  and  almost  every  character  of  the  trader's  sign  manual 

is  shown. 


23 


354  THE  GRAIN  TRADE 

shop  fight  is  told,  although  it  can  be  told  but  briefly  and  inade- 
quately here.  A  bucket  shop  is  a  counterfeit  of  a  branch  office  of 
a  member  of  the  genuine  exchange,  and  like  most  counterfeits,  is 
a  good  imitation.  It  contains  a  blackboard  for  posting  the  con- 
tinuous quotations  as  they  come  in  over  the  wire.  In  this  respect 
it  resembles  the  branch  office  of  any  large  ''Private  Wire  house," 
that  is,  house  operating  leased  wires  and  maintaining  branch 
offices.  Some  of  the  largest  dealers  in  both  cash  and  futures  on 
the  organized  exchanges  are  private  wire  houses.  However, 
private  wire  houses  are  members  of  the  regular  exchanges,  and  all 
orders  coming  to  them  are  executed  on  the  open  market  on  the 
trading  floor  of  the  exchange — that  is,  become  binding  contracts 
whose  terms  must  be  and  are  fulfilled.  The  private  wire  house 
usually  requires  a  customer  to  deposit  a  so-called  ''margin"  of 
ten  per  cent  to  protect  the  trade  against  an  adverse  turn  in  the 
market.  Thus,  if  the  trade  happens  to  be  for  5,000  bushels  of 
com  at  one  dollar  a  bushel,  the  margin  would  be  $500.  The 
bucket  shop  operator  requires  a  very  small  margin,  probably  one 
cent  a  bushel  or  one-half  cent  a  bushel,  so  that  five  dollars  could 
margin  a  trade  of  1,000  bushels.  The  operator  of  the  bucket  shop 
is  not  a  member  of  the  Exchange.  He  does  not  execute  his  orders 
on  any  exchange,  and  hence  these  "orders"  are  mere  bets,  and 
have  no  significance  in  registering  supply  and  demand  influences 
or  in  affording  hedging  facilities.  The  operator  of  the  bucket  shop 
takes  the  other  side  of  the  trade  himself,  that  is,  in  trade  language, 
he  "buckets  the  trade."  ^  The  customer  has  a  very  slender  chance 
indeed  of  winning.  His  margin  is  so  small  that  upon  a  very  slight 
fluctuation  of  the  market  his  margin  is  gone  and  his  trade  is  closed. 
And  since  the  operator  has  it  within  his  power  to  post  false  quota- 
tions, it  is  obvious  that  only  enough  customers  are  permitted  to 
win  to  serve  as  bait  for  new  victims.  Bucket-shop  gambling 
spread  rapidly  over  the  United  States.  Chicago,  being  the  center 
for  future  trading  for  the  whole  United  States  and  for  the  world, 
naturally  became  the  leader  in  the  long  struggle  against  the  power- 
ful, deeply  intrenched  bucket-shop  interests.  In  the  early  80's 
the  evil  became  so  prominent  as  to  engage  a  very  large  share  of 
the  attention  of  the  meetings  of  the  Directors  of  the  Board  of 
Trade.  In  the  year  1890  the  Board  decided  to  stop  the  giving 
out  of  all  quotations  on  futures,  and  such  an  embargo  was  actually 

*  This  practice  formerly  occurred  at  intervals  on  the  exchanges.  It  is  now 
strictly  forbidden.  One  exchange  expelled  one  of  its  ex-presidents  for  bucket- 
ing trades.    The  exchanges  have  now  practically  eliminated  this  practice. 


BUCKET  SHOP  FIGHT  355 

put  into  effect.  But,  by  hook  or  crook,  the  bucket  shops  were 
ingenious  enough  to  get  the  quotations — mostly  by  theft.  Presi- 
dent Baker  of  the  Board  was  re-elected  to  office  in  1891  on  the 
issue  of  embargoing  quotations.  He  denounced  the  Western 
Union  Telegraph  Company  as  a  secret  enemy  of  the  Board  of 
Trade.  In  1892  a  return  to  open  quotations  was  made,  the  embargo 
having  proven  ineffective.  The  bucket-shop  fight  now  defined 
itself  as  a  question  of  the  control  of  quotations.  President  Warren 
of  the  Board  of  Trade  called  a  convention  of  all  leading  grain 
exchanges  to  discuss  ways  and  means  of  fighting  bucket  shops, 
and  particularly  the  adoption  of  a  national  anti-bucket-shop  law. 
Finally,  after  spending  many  tens  of  thousands  of  dollars  on  the 
fight,  the  Chicago  Board  of  Trade  evolved  a  successful  plan.  A 
telegraph  company  (the  Cleveland  Telegraph  Company)  was 
formed  in  1900  to  collect  the  quotations  on  the  floor  and  to  assume 
control  of  all  wires  and  instruments  on  the  floor.  The  Western 
Union  Telegraph  Company,  now  enjoying  great  revenue  from  the 
sale  of  quotations,  was  ordered  off  the  floor.  Quotations  from  this 
time  on  were  furnished  to  the  Western  Union,  or  other  companies, 
only  upon  the  signing  of  a  contract  not  to  furnish  them  to  bucket 
shops,  and  giving  the  Board  itself  the  right  to  decide  to  what 
applicants  such  quotations  should  be  furnished,  and  from  whom 
they  should  be  cut  off.  From  this  time  on  the  Federal  Department 
of  Justice  and  various  State  legal  departments  joined  in  with  the 
attorney  of  the  Chicago  Board  of  Trade,  and  a  nation-wide  cam- 
paign was  relentlessly  pushed.  In  1905  came  the  Christie  decision 
of  the  United  States  Supreme  Court,  giving  the  Board  of  Trade  a 
property  right  in  its  quotations,  and  hence  full  control  over  them. 
By  the  year  1915  existing  bucket  shops  had  all  been  closed.  Since 
that  date  an  occasional  one  shows  its  head  under  some  disguise,  but 
the  special  agent  of  the  Chicago  Board  of  Trade  or  of  the  New  York 
Stock  Exchange,  or  the  two  working  together,  soon  eliminate  it. 
Much  of  the  condemnation  of  grain  exchanges  as  "gambling 
places"  come  from  the  old  bucket  shops — bastard  exchanges — 
which  were  100  per  cent  gambling  places.  These  counterfeits 
have  hurt  the  standing  of  the  genuine  exchanges.  The  fact 
remains,  however,  that  the  Board  of  Trade  of  Chicago  and  the 
other  great  organized  grain  exchanges,  as  they  are  now  developed, 
are  efficient  pieces  of  market  machinery,  operating  at  a  low  margin 
of  cost  per  bushel,  under  democratic  rules  of  self-government,  and 
managed  by  boards  of  directors  responsive  to  the  welfare  and 
interests  of  the  general  public. 


356  THE  GRAIN  TRADE 

(2)  Evolution  of  Terminal  Elevator — ^Railroad  Monopoly. — 

Following  the  Civil  War,  the  competing  railroads  in  the  grain 
States  found  it  necessary  to  erect  terminal  storage  in  order  to 
secure  their  share  of  the  grain  business.  Later  these  terminal 
elevators  or  warehouses  were  also  built  by  large  grain  firms  on 
the  terminal  markets.  These  firms,  in  many  cases,  then  built  a 
series  or  ''hne"  of  country  elevators  along  particular  railroads. 
There  soon  developed  a  form  of  combination  between  railroad 
and  terminal  elevator  whereby  rebates  or  other  privileges  were 
given  to  the  terminal  elevator  companies,  so  that  one  firm  would 
have  a  monopoly  of  the  grain  business  along  a  certain  railroad. 
Terminal  elevator  companies  were  at  first  mere  custodians  of 
grain.  But  this  practice  failed  to  yield  enough  income,  so  these 
companies  became  grain  merchants  in  competition  with  their 
customers  hiring  storage  in  their  bins.  This  gave  them  vast 
advantages,  particularly  in  the  mixing  of  grain  and  the  manipula- 
tion of  grades.  Several  scandals  arose  out  of  the  sale  of  fraudulent 
warehouse  receipts.  When  the  terminal  elevator  companies  had 
well-nigh  completed  their  railroad  monop'oly  of  the  country  grain 
trade  and  had  entered  the  terminal  market  as  grain  dealers,  and 
the  future  market  as  heavy  grain  speculators,  they  were  in  a  fair 
way  to  drive  out  all  competitors.  Seats  on  the  grain  exchanges 
fell  in  value.  Grain  commission  firms  were  fast  quitting  the 
business  as  a  losing  game.  When  things  reached  this  stage, 
reforms  began  to  be  worked  out  from  within.  The  Chicago  Board 
of  Trade,  for  instance,  sent  a  group  to  the  capital  of  Illinois  to 
lobby  for  a  bill  for  a  State  warehouse  act,  prohibiting  a  public 
warehouse  owner  to  be  a  dealer  in  grain  and  a  custodian  of  grain 
in  the  same  warehouse  at  the  same  time.  Consequently  any  mixing 
of  grain  in  Illinois  had  to  be  done  in  private  warehouses,  following 
the  passage  of  this  Act  in  1871.  The  railroad  rebate  evil  continued, 
however,  for  many  years,  even  after  the  passage  of  the  Interstate 
Commerce  Act  of  1887.  It  remained  for  one  member  of  the  Mil- 
waukee Chamber  of  Commerce,  trying  to  operate  a  terminal 
elevator  in  that  market  in  the  face  of  the  railway-elevator  combine, 
to  bring  the  concrete  situation  to  the  attention  of  President  Roose- 
velt. The  significance  of  this  act  in  securing  remedial  legislation 
in  the  form  of  the  Hepburn  Act  is  thus  told  by  the  editor  of  the 
Price  Current  Grain  Reporter :  ^ 

"Of  the  many  things  that  stand  to  his  credit  as  a  statesman,  for  one  at 
least  Theodore  Roosevelt  will  be  held  in  grateful  remembrance  by  the  American 

^Osman,  E.  G.,  Price  Current  Grain  Reporter,  Jan.  15,  1919,  p.  7. 


EVOLUTION  OF  FARMERS'  ELEVATORS  357 

grain  trade.  Conceived  in  the  brain  of  the  late  E.  P.  Bacon  and  forced  through 
a  reluctant  Congress  in  defiance  of  the  opposition  of  the  leaders  of  his  own 
party  by  the  inflexible  determination  of  President  Roosevelt  to  do  the  right 
thing  in  this,  the  Hepburn  Act  made  the  railroads  for  the  first  time,  what  they 
had  been  in  name  only  before,  'common  carriers,'  compelled  by  law  to  treat 
all  men  as  equals.  Those  only  who  know  to  what  depths  of  meanness  the  rail- 
ways had  descended  in  the  treatment  of  individuals  before  the  Hepburn  Act 
became  law,  and  how  they  fought  to  retain  their  power  to  continue  such 
practices,  can  reaUze  how  great  is  the  debt  of  the  grain  trade  to  these  two  men. 
And  yet  so  short  is  the  pubHc  memory,  or  so  great  is  pubhc  ignorance,  most  of 
the  things  for  which  railway  reform  agitators  to-day  are  still  clamoring  will 
be  found  embodied  in  the  Hepburn  Act  and  its  subsequent  amendments  bear- 
ing the  signature  of  Theodore  Roosevelt. 

"  The  greatest  evil  of  railroad  management  in  the  past  was  removed  with- 
out revolution,  although  the  influence  of  the  Hepburn  Act  upon  the  conduct 
of  the  grain  trade  was  revolutionary.  It  gave  new  life  to  competition  in  the 
grain  trade  of  individuals  and  locaHties  and  rescued  the  trade  from  a  state  of 
monopoly  that  was  rapidly  becoming  supreme  throughout  the  surplus  grain 
States.  In  other  hues  of  trade  and  industry  the  same  tendency  towards  con- 
centration of  trade  in  a  few  hands  was  in  like  manner  checked  in  so  far  as 
equahty  of  transportation  service  can  ever  stop  that  tendency." 

In  recent  years  railroads  are  forbidden  to  operate  terminal 
elevators.  Consequently  their  terminal  elevators  are  either  sold 
or  leased  to  grain  firms. 

Terminal  warehouses  are  now  of  two  general  kinds,  pubUcand 
private.  In  public  houses,  the  grain  of  the  public  is  stored  for 
fixed  storage  charges,  and  grains  of  different  grades  are  kept  in 
separate  bins.  The  owner  of  the  warehouse  is  a  custodian  only 
and  cannot  use  the  house  for  storing  his  own  grain.  Private  ware- 
houses are  used  by  owners  for  storing  their  own  grain,  which  they 
are  at  liberty  to  mix  in  any  manner  they  see  fit.  Grain  sold  for 
future  delivery  must  be  stored  in  the  regular  public  warehouses, 
and  receipts  of  these  warehouses  are  used  in  making  such  deliveries. 
Private  houses  often  contain  machinery  for  drying  wet  grain,  a 
serious  problem  in  some  years  (as  corn  in  1917),  and  also  machinery 
for  cleaning  and  conditioning  out-of-condition  grain  and  grain 
not  fit  for  storage  or  milling.  These  ''hospital"  elevators  thus 
make  a  market  for  low-grade  grain.  Some  buy  the  grain  outright ; 
some  perform  the  service  for  the  general  public  at  fixed  charges. 

Under  the  presidency  of  Hiram  N.  Sager,  the  Chicago  Board  of 
Trade  made  a  working  agreement  with  the  terminal  elevator 
interests  (Fig.  73).  The  terminal  market  machinery,  so  far  as 
terminal  storage  is  concerned,  has  finally  been  evolved  so  that  the 
benefits  of  it  accrue  to  the  grain  trade  in  general,  including  the 
country  elevator  and  the  farmer  who  raises  the  grain. 

(3)  Evolution  of  Farmers*  Elevators. — Under  the  impetus  of 
the  Grange  movement  a  few  farmers'  grain  elevators  were  started 


358 


THE  GRAIN  TRADE 


during  the  early  70's.  But  the  indications  are  that  these  all  went 
out  of  existence.  After  this  there  grew  up  two  kinds  of  country 
elevators,  namely,  the  ''independent"  house,  owned  by  some 
local  business  man,  and  the  ''line"  house,  belonging  to  some  grain 
firm  operating  a  number  or  line  of  country  elevators.  Most  large 
terminal  elevator  companies  owned  a  line  of  country  houses;  so 
did  the  larger  mills.  These  elevators  in  each  grain  State  were 
loosely  federated  in  a  State  Grain  Dealers'  Association,  to  check 
irresponsible  grain  dealers,  to  fight  "scoop  shovelers,"  and  for 

general  protective  purposes.  To 
prevent  price  wars  and  destruc- 
tive competition  the  "  regular" 
elevators  (as  they  came  to  be 
called)  developed  a  price  fixing 
scheme.  A  small  committee,when 
terminal  price  changes  warranted, 
would  send  out  to  the  country,  to 
each  house,  a  new  price  schedule. 
This  prevented  any  price  war. 
But  more  important  yet,  it  guar- 
anteed a  very  liberal  margin  of 
profit  to  the  terminal  dealers,  at 
the  expense  of  the  farmers.  The 
State  of  Nebraska,  for  instance, 
was  divided  into  13  districts,  on 
the  basis  of  freight  rates,  and 
prices  were  fixed  accordingly  for 
each  district.  In  Iowa  the  price 
fixing  was  administered  through 
the  Secretary  of  the  Iowa  Grain  Dealers'  Association,  with  head- 
quarters at  Des  Moines.  In  Illinois,  in  a  similar  manner,  the 
secretary  of  the  Grain  Dealers'  Association  safeguarded  the  inter- 
ests of  the  "regulars."  This  system  of  graft  at  the  expense  of  the 
farmer  finally  reached  the  breaking  point.  So  far  as  our  historical 
records  go,  the  revolt  of  the  farmers  began  at  Rockwell,  Iowa,  in 
1889,  when  the  first  successful  farmers'  elevator  was  erected.  This 
little  corporation  inserted  in  its  by-laws  that  very  much  discussed 
provision,  namely,  the  "penalty  clause."  This  meant  that  the 
member  of  the  company  delivering  his  grain  to  the  competitor 
must  pay  a  penalty  to  his  own  company  of  so  much  a  bushel. 
Whether  legal  or  illegal,  it  worked.  And  the  "regular"  house, 
after  securing  much  farmer  grain  by  raising  its  price,  found  that 


Fig.  73. — Hiram  N.  Sager,  Ex-President  of 

the  Chicago  Board  of  Trade.    A  type  of  the 

American  grain  merchant. 


BIG  DIVIDENDS  '  359 

this  increment  in  price  was  turned  back  to  the  farmers'  company. 
Obviously,  the  more  competition  of  this  kind,  the  stronger  would 
grow  the  farmer  company.  The  fight  was  then  shifted  to  the 
terminal  market,  and  every  effort  was  made  to  prevent  the  com- 
mission merchants  or  other  dealers  from  handling  grain  from  these 
farmers'  houses.  The  fight  now  reached  a  critical  stage,  and  the 
farmers'  elevator  movement  was  on  the  verge  of  being  quickly 
put  to  death.  Two  commission  firms  on  the  Chicago  Board  of 
Trade  at  this  time  (1903-1904)  came  to  the  rescue  of  the  farmers' 
movement.^  They  sent  speakers  and  organizers  into  Iowa  and 
soon  organized  a  large  number  of  farmers'  elevators.  They  re- 
ceived and  sold  the  farmers'  grain.  The  fight  was  won.  The 
opposition  collapsed.  The  farmers'  elevator  movement  soon 
spread  to  twelve  States,  and  in  each  State  so-called  Farmers'  Grain 
Dealers'  Associations  were  formed,  with  their  own  federation  and 
their  own  official  organ,  the  American  Cooperative  Journal. 

The  immediate  effect  of  the  farmers'  elevator  movement  was 
to  lower  the  spread  in  prices  between  the  terminal  and  the  local 
markets.  Here  the  farmer  had  won  his  greatest  victory,  had  over- 
come the  greatest  evil  in  the  grain  trade.  He  had  won  his  fight 
partly  by  his  own  organization,  partly  by  the  help  of  members 
of  the  Chicago  Board  of  Trade.  Now  a  large  per  cent  of  the  grain 
received  on  all  markets  comes  direct  from  farmers'  elevators. 

The  Fight  in  Canada. — It  is  worthy  of  note  that  a  similar  fight 
was  had  in  Canada,  and  that  there  the  farmers  won  a  very  signal 
victory,  and  succeeded  in  forming  the  largest  cooperative  company 
on  the  American  continent,  with  a  business  exceeding  in  volume 
one  hundred  miUion  dollars  a  year. 

Farmers'  Elevators  Copy  "  Regulars." — The  farmers'  elevator 
movement  having  become  a  successful  commercial  venture  is  now 
copying  many  of  the  practices  of  the  "regulars."  The  farmers 
have  secured  seats  on  the  grain  exchanges — two  in  Winnipeg, 
three  in  Minneapohs,  and  two  in  Chicago.  The  Canadian  com- 
panies are  already  operating  ''line  elevators."  They  own  their 
own  terminal  elevators,  including  hospital  elevators.  They  have 
their  private  wire  from  Winnipeg  to  Calgary  (one  thousand  miles). 
In  the  United  States  many  farmers'  companies  now  operate  lines 
of  elevators.    One  farmers'  company  owns  a  terminal  elevator. 

Big  Dividends. — One  great  weakness  of  the  farmers'  elevator 
is  its  undue  fondness  for  big  dividends,  many  of, these  houses 

^  These  firms  were  Eschenburg  &  Dalton,  and  Lowell  Hoit  &  Company. 


360  *  THE  GRAIN  TRADE 

paying  a  dividend  of  one  hundred  per  cent  or  more,  year  after 
year.  The  non-member  who  sells  to  the  house,  of  course,  does 
not  participate  in  the  dividend,  although  he  helps  create  it. 

Dockage  Question. — The  present  problem  of  dockage  is  a 
pressing  one.  The  farmers'  elevator  now  usually  follows  one  of 
four  practices:  (1)  Runs  the  grain  through  a  cleaner,  and  ships 
the  clean  grain  to  market.  The  ''screenings"  (dockage)  accumu- 
late until  a  carload  is  on  hand,  which  is  then  shipped  to  the  ter- 
minal and  sold  to  the  mills  making  stock  feeds.  In  this  way  the 
farmer  receives  full  market  price  for  his  screenings.  (2)  the  grain 
is  shipped,  dirt  and  all,  to  the  terminal,  and  is  sold  there  on  its 
merits,  a  certain  per  cent  being  deducted  (or  "docked")  on  account 
of  the  foreign  matter  contained.  The  freight  has  been  paid  on 
this  matter,  and  yet  nothing  is  received  for  it,  in  this  case.  (3) 
The  grain  may  be  sent  to  a  terminal  elevator,  ordered  cleaned,  the 
screenings  sold  on  the  market,  and  the  clean  grain  sold  on  the 
market.  (4)  The  farmer  may  have  a  cleaning  mill  on  his  farm, 
clean  his  own  grain,  and  keep  the  screenings  at  home  for  poultry 
and  stock  feed.  If  he  has  a  feed  mill  for  grinding  the  screenings, 
he  will  not  thus  scatter  foul  seeds  about  his  farm. 

It  is  only  within  veiy  recent  years  of  high  prices  that  screenings 
have  taken  on  value  and  importance  in  grain  marketing.  A  fifth 
suggestion  may  well  be  added  concerning  the  heavy  dockage  in 
all  spring  wheat  regions,  namely,  that  if  the  farmers  had  a  crop 
rotation  and  raised  a  few  cultivated  crops,  they  would  thus 
eliminate  the  weeds,  and  then  there  would  be  no  dockage  prob- 
lem. For  after  all,  dockage  is  a  weed  problem,  and  the  fundamental 
solution  is  to  quit  raising  weeds. 

QUESTIONS  ON  THE  TEXT 

1.  Show  that  the  grain  trade  of  the  United  States  is  an  "international 

matter."    Cite  Argentina's  experience. 

2.  Name  chief  exporting  countries  (wheat),  average  amount  exported;  chief 

importing  countries,  and  average  amount  imported. 

3.  Rank  in  order  of  money  value  the  leading  crops  of  the  United  States. 

4.  Show  relative  importance  on  the  markets  of  wheat  and  com. 

5.  Show  the  competitive  nature  of  the  grain  trade.     What  markets,  for 

instance,  bid  for  Iowa  corn? 

6.  Locate  the  more  important  grain  exchanges  of  the  United  States. 

7.  Discuss  present  organization  of  the  grain  trade  under  the  following  topics : 

country  elevator  (three  kinds);  grading  and  dockage;  selling  the  local 
grain;  financing  the  local  elevator;  mixing;  storage  and  hedging  prob- 
lem of  country  elevator;  hedging  in  North  and  South  compared;  pubUc 
and  private  terminal  elevators;  hospital  elevators;  grain  exchange 
(organization,  membership,  market  news  service). 

8.  Show  relation  of  farmer  to  the  terminal  market  and  how  he  may  improve 

this  relationship. 


REFERENCES  361 

9.  Discuss  in  detail  the  past  organization  of  the  grain  trade  under  the  three 
following  topics:  (1)  Evolution  of  organized  exchanges  (weighing, 
inspection,  grading,  cash  grain,  to-arrive  grain,  future  trading,  short 
selling,  speculation  and  manipulation,  corners  and  rules  on — Hutchin- 
son, Leiter,  and  Pattern  corners — hedging  speculation  and  the  wide 
market  question,  dehvery  notices,  pit  scalpers,  "phantom"  grain  ques- 
tions, effect  of  speculation  on  price,  cost  of  future  trading,  volume  of 
future  trading,  the  bucket-shop  fight,  present  condition  of  exchanges). 

(2)  Evolution  of  terminal  elevators  (early  terminal  storage,  relation  to 
railroads,  early  evils  of  system,  early  regulation,  Hepburn  Act  and  its 
effects,  present  situation  as  regards  railroads  and  terminal  elevators). 

(3)  Evolution  of  farmers' elevators  (first  and  second  beginnings,  ''reg- 
ular" houses,  price  fixing,  Rockwell  Iowa  in  1889,  "penalty  clause," 
struggle  of  farmers  to  help  themselves,  aid  from  Chicago  Board  of  Trade 
members,  outcome,  present  commercial  methods  of  farmers'  elevators, 
problem  of  dockage  and  its  fundamental  solution). 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Compare  the  statements  of  Liebig  and  Sir  WilUam  Crookes  as  to  soil 

exhaustion,  and  criticise  the  position  taken  by  each.  What  error,  if 
any,  did  each  make? 

2.  Compare  the  costs  of  marketing  grain,  through  the  organized  exchanges, 

with  the  costs  of  marketing  hay  (without  organized  exchanges). 

3.  Can  speculation  in  grain  be  limited  to  those  who  are  members  of  the  grain 

trade? 

4.  Is  the  cost  of  hedging-insurance  too  much? 

5.  Secure  a  copy  of  the  annual  report  and  of  the  rules  of  any  leading  grain 

exchange,  and  study  them  carefully.  Are  these  rules  fair  to  both 
farmers  and  consumers?    Are  the  membership  requirements  too  high? 

6.  Is  the  grain  exchange  an  "open  market"?    Is  it  a  competitive  market? 

REFERENCES 

1.  See  Annual  Reports  issued  by  Secretaries  of  the  following  grain 
exchanges : 

Chicago  Board  of  Trade  St.  Louis  Merchants'  Exchange 

Minneapolis  Chamber  of  Commerce  Milwaukee  Chamber  of  Commerce 

Winnipeg  Grain  Exchange  Toledo  Produce  Exchange 

Duluth  Board  of  Trade  Baltimore  Chamber  of  Commerce 

Omaha  Grain  Exchange  New  York  Produce  Exchange 
Kansas  City  Board  of  Trade 

2.  On  Weighing,  Inspection,  Grading,  see  following  Reports : 

Annual  Reports,  State  Weighmasters'  Department,  St.  Paul,  Minnesota. 

Annual  Reports,  State  Grain  Inspection  Department,  St.  Paul,  Minnesota. 

Annual  Reports,  Illinois  Railroad  and  Warehouse  Commission,  Spring- 
field, Illinois. 

Annual  Reports,  Missouri  State  Grain  Inspector,  Kansas  City,  Missouri. 

Bulletins  on  Federal  Grain  Supervision,  issued  by  United  States  Bureau 
of  Markets,  Washington,  D.  C. 

3.  Government  PubUcations: 

(1)  Prices  of  wheat  to  producers  in  Kaasas,  etc.,  63  Cong.  3  Sess.  House 
Doc.  1271. 

(2)  Report  of  State  Grain  Commissioners.  Bismarck,  North  Dakota, 
PubHc  Document  No.  26  (1910). 


362  THE  GRAIN  TRADE 

(3)  Report  of  the  Board  of  Grain  Commissioners  to  Governor  John  Burke, 
Bismarck,  North  Dakota.    PubUc  Document,  No.  37  (1908). 

(4)  Report  on  Terminal  Grain  Elevators  made  to  the  Fourteenth  Legis- 
lative Assembly  of  the  State  of  North  Dakota  by  the  Board  of  Control  of 
State  Institutions  (1915).  Also  "Further  Report"  of  same  Board,  in  Journal 
of  the  House,  Fourteenth  Legislative  Assembly  of  North  Dakota,  February 
18,   1915,  pp.   77-107. 

(5)  Journal  of  the  House,  Thirty-eighth  session.  State  Legislature  of  Minne- 
sota, April  17,  1913.  Report  of  the  Special  House  Grain  Investigating  Com- 
mittee, pp.  2-12. 

(6)  Journal  of  the  Senate,  Thirty-eighth  session,  State  Legislature  of 
Minnesota,  April  22,  1913.  Report  of  the  Work's  Grain  Investigating  Com- 
mittee, pp.  49-79. 

(7)  Report  of  the  Grain  Markets  Commission  of  the  Province  of  Saskatche- 
wan, 1914,  Regina. 

(8)  Grain  Inspection  in  Canada,  By  R.  Magill,  chief  commissioner  Board 
of  Grain  Commissioners  of  Canada.  Issued  by  the  Department  of  Trade  and 
Commerce,  Ottawa,  Canada. 

(9)  The  Canada  Grain  Act  of  1912  with  Amendments,  Ottawa.  This 
law  may  be  termed  the  "Federal  Inspection  of  Grain"  as  employed  in  Canada. 

(10)  Report  of  the  Royal  Commission  on  the  Grain  Trade  of  Canada, 
1906.    Ottawa,  Canada. 

(11)  Report  of  the  Elevator  Commission  of  the  Province  of  Saskatche- 
wan, 1910.     Regina. 

(12)  Progress  Report  from  the  Royal  Commission  on  the  Marketing, 
Transportation  and  Storage  of  Grain,  Presented  to  the  Parhament  of  Victoria, 
Australia,  1913.    Melbourne. 

(13)  United  States  Industrial  Commission  Report,  Nineteen  volumes, 
1898.     Washington,  Volume  10,  Volume  19. 

(14)  Wheat  and  Flour  Prices  from  Farmer  to  Consumer.  Bulletin,  United 
States  Bureau  of  Labor  Statistics,  No.  130.    Washington. 

(15)  Bucknell,  Frank  W.,  Wheat  Production  and  Farm  Life  in  Argentina. 
Bulletin  No.  27,  Bureau  of  Statistics,  United  States  Department  of  Agricul- 
ture.   Washington,  1904. 

(16)  La  Follette,  R.  M.,  Speech  on  the  Railroad  and  Elevator  Monopoly. 
Congressional  Record  XL,  Part  10,  p.  9093. 

(17)  Testimony  taken  by  Interstate  Commerce  Commission  October  15- 
November  23,  1906,  in  Matter  of  Relations  of  Common  Carriers  to  the  Grain 
Trade.    59  Cong.  2  Sess.  Senate  Doc.  No.  278.    Washington,  1907. 

4.  Non-ofhcial  publications: 

(1)  The  Siege  of  Ottawa.  Being  the  story  of  the  800  farmers  from  Ontario, 
etc.,  who  demanded  more  equitable  legislation,  etc.  Published  by  Grain 
Growers'  Guide,  Winnipeg. 

(2)  American  Produce  Exchanges.  Annals  of  the  American  Academy, 
September,  1911,  Philadelphia. 

(3)  Speculation  on  the  Stock  and  Produce  Exchanges  of  the  United  States. 
By  H.  C.  Emery.    Pubhshed  by  Columbia  University^  New  York  City,  1896. 

(4)  The  Stock  Exchange  from  Within,  by  W.  C.  Van  Antwerp.  Pubhshed 
by  Doubleday,  Page  &  Co.,  Garden  City,  N.  Y.,  1913.  Pages  415-446  contain 
the  full  report  of  Governor  Hughes'  Committee  on  Speculation  in  Securities 
and  Commodities. 

(5)  Wheat  Fields  and  Markets  of  the  World,  by  Rollin  E.  Smith.  Modern 
Miller  Publishing  Co.,  Chicago,  1908.  This  book  contains  very  full  accounts 
of  the  following  exchanges  and  terminal  elevators  dealing  in  grain :  Chicago, 
Minneapolis,  Duluth,  Kansas  City,  St.  Louis,  Winnipeg.  Also  the  grain 
markets  of  the  following  places  are  discussed:  Liverpool,  London,  Antwerp, 
Paris,  Berlin,  Buda  Pesth. 


APPENDIX  363 

(6)  Grain  Exchange  Facts.  Two  special  numbers  of  the  American  Coop- 
erative Journal,  Chicago,  August  and  September,  1915. 

(7)  Weld,  L.  D.  H.  The  Marketing  of  Farm  Products.  New  York, 
Macmillan,  1916. 

(8)  Huebner,  Grover.  Agricultural  Commerce.  New  York,  Appleton, 
1915. 

(9)  Piper,  C.  B.  Principles  of  the  Grain  Trade  of  Western  Canada. 
Empire  Elevator  Company,  Winnipeg,  1915. 

(10)  Usher,  A.  P.  The  History  of  the  Grain  Trade  in  France,  1400-1700. 
Cambridge,  Massachusetts,  1913. 

(11)  Refsell,  V.  N.  The  Farmers'  Elevator  Movement.  Journal  of 
Pohtical  Economy  (Chicago),  Vol.  22,  pp.  872-895;  969-992. 

(12)  The  Saskatchewan  Cooperative  Elevator  News.  Regina  (current 
files),  June,  1916. 

(13)  Schelle,  Gustave.  Turgot  et  le  pacte  de  famine.  Institut  de  France, 
Acad.  d.  sci.  Mor.  et  poht.  Seances  et  travaux.  n.  s.  V,  74,  pp.  189-217. 
Paris,  1910. 

(14)  Perlmann,  Louis.  Die  bewegung  der  weizenpreise  und  ihre  ursachen. 
Miinchen  und  Leipzig,  1914. 

(15)  Kirkland,  John.  Three  centuries  of  prices  of  wheat,  flour,  and  bread. 
War  prices  and  their  causes,  London,  1917. 

(16)  Boyle,  James  E.  Speculation  and  the  Chicago  Board  of  Trade,  New 
York,  Macmillan,  1920. 

(17)  Taylor,  Charles  H.  (Editor).  History  of  the  Board  of  Trade  of  the 
City  of  Chicago.    3  Volumes.     Chicago,  Robert  O.  Law  Company,  1917. 

(18)  Grain  Grading  in  Minnesota.    Grain  Growers'  Guide,  June  6,  1917. 

(19)  Wheat  Marketing  Through  Pacific  Northwest  Non-profit,  Coopera- 
tive marketing  Associations  (Washington,  Oregon,  and  Idaho  Wheat  Growers' 
Associations).  Pamphlet  (16  pages)  issued  by  Organization  Committee  of 
Wheat  Growers'  Associations  of  Pacific  Northwest,  Empire  Building.  Spokane, 
Wash.,  n.  d.  (January,  1920?). 

APPENDIX 

Relation  of  Future  Trading  to  the  Financing  of  the  Grain  Trade. — From 
an  article  in  the  National  Hay  and  Grain  Reporter  of  May  20,  1911,  by  David 
R.  Forgan,  President  National  City  Bank,  Chicago,  Ilhnois. 

"Warehouse  receipts  for  grain,  or  anything  else  that  finally  becomes  human  food,  are, 
in  my  opinion,  the  best  possible  collateral  for  bank  loans.  I  have  seen  the  time  more  than 
once  when  high-class  stocks  and  bonds,  and  even  Government  bonds,  could  not  readily  be 
sold,  but  I  have  never  seen  the  time,  nor  do  I  ever  expect  to  see  it,  when  anything  that  has 
to  be  eaten  could  not  be  sold.  The  warehouse  receipts,  therefore,  above  alluded  to,  consti- 
tute a  collateral  which  is  always  available  for  the  payment  of  debts. 

"Furthermore,  if  the  grain  or  provisions  represented  by  warehouse  receipts  are  already 
sold  for  future  delivery,  that  fact  adds  a  great  element  of  strength  to  the  loan,  because  there 
is  a  third  party  obligated  to  take  the  grain  at  a  certain  time  for  a  given  price.  When  I  lived 
in  Minneapolis  I  had  the  only  unpleasant  experience  I  have  ever  had  in  connection  with  the 
elevator  business.  A  terminal  elevator  concern  filled  its  elevators  with  wheat,  and  thinking 
that  the  market  was  likely  to  go  up  they  did  not  hedge  it  by  selling  for  future  delivery.  In 
other  words  they  speculated  on  their  wheat.  The  market  had  a  large  and  a  sudden  drop, 
with  the  result  that  the  elevator  concern  failed,  and  the  bank  with  which  I  was  connected 
made  a  loss.  The  present  method,  therefore,  of  carriers  of  grain  or  provisions  selling  them  for 
future  delivery  is  a  highly  satisfactory  one  to  the  banks  whose  money  is  loaned  to  the  carriers. 
The  sale  for  future  delivery  is  the  link  in  the  chain  that  makes  such  loans  the  best." 

An  Argentina  Need. — "There  is  no  gambling  in  grain  in  Argentina,  so 
frequently  denounced  in  our  Congress  and  by  the  pubhc  in  this  country.  The 
grain  business  in  Argentma  is  in  the  hands  of  a  trust,  which  pays  its  own  price 
as  a  rule  for  the  products  of  the  soil,  exacting  an  enormous  tolj  not  only  on  the 
grain,  but  even  on  the  bags  which  are  furnished  for  transporting  the  grain. 

"What  the  Argentine  producer  would  hke  to  have  is  a  great  Chicago  or 
Minneapolis  market  where  he  could  know  just  what  the  world  thinks  concern- 


364  THE  GRAIN  TRADE 

ing  grain  prices.  What  he  has  are  a  few  enormously  wealthy  exporters  setting 
their  own  price  upon  his  product. 

"Argentina  will  never  be  a  great  agricultural  country  until  she  emerges 
from  the  chrysalis  of  monopoly  which  surrounds  her  grain  trade.  If  the 
American  farmer  desires  to  test  the  efficacy  of  our  own  system  of  marketing 
and  handling  grain,  and  of  our  own  methods  of  estabhshing  prices  for  grain, 
let  him  proceed  to  study  the  Argentina  sj'^stem. 

"  I  returned  with  a  most  wholesome  respect  for  the  American  farmer,  and 
I  reahze  as  never  before,  that  the  stability  of  this  country  depends  upon  the 
prosperity  of  the  man  wno  produces  its  wealth  just  as  much  or  perhaps  more 
than  the  man  who  consumes  the  products  of  the  soil.  But  I  also  came  back 
with  a  more  intelligent  regard  for  the  great  economic  system  which  prevails 
in  this  country,  which  enables  us  to  market  grain  at  a  minimum  of  profit 
between  the  man  who  produces  it  and  the  man  who  consumes  it." — Pwkdl,  J. 
Ralph,  Agricultural  Argentina,  pp.  58-59. 


CHAPTER  XXIII 

LIVE-STOCK  AND  MEAT  INDUSTRY 

Introductory. — By  reason  of  the  large  capital  invested,  the 
number  of  persons  employed,  and  the  value  of  the  output, 
the  meat  packing  industry  of  the  United  States  ranks  high 
among  the  great  and  fundamental  industries  of  the  country. 
Since  American  cotton,  wheat  and  meat  play  such  an  import- 
ant role  in  clothing  and  feeding  the  world,  the  meat  and 
live-stock  situation  is  one  not  merely  of  national  but  also  of  inter- 
national concern. 

The  shifting  of  live-stock  production  to  the  open  lands  of  the 
West  and  the  concomitant  growth  of  large  centralized  packing 
houses  are  the  two  outstanding  features  of  the  meat  question  in 
the  United  States.  Five  great  packing  house  companies  have 
risen  above  all  competitors  to  a  prominent  position.  Since  the 
meat  packing  industry  is  one  not  protected  by  patents  or  monopoly, 
privileges  or  exclusive  franchises  of  any  kind,  but  represents  the 
free  play  of  competitive  forces  in  American  industrial  evolu- 
tion, the  rise  of  five  pacldng  companies  to  a  position  of  such 
vast  and  far-reaching  power  presents  in  concrete  form  certain 
unsolved  economic  and  legal  questions  of  public  policy.  Our 
eighteenth  century  legal  philosophy  of  competition  among  small 
units  does  not  square  with  our  present-day  economic  facts  of 
large  scale  business — of  efficient  competition  eliminating  the 
weaker  competitor. 

This  chapter  aims  to  present  in  larger  outline  the  basic  factors 
involved,  since  the  issue  presented  to  the  country  by  the  meat 
packing  industry  is  one  of  public  concern  and  one  which  needs 
constructive  rather  than  destructive  criticism. 

The  Live-stock  Situation. — The  live-stock  question  andthemeat 
packing  question  are,  from  the  public  standpoint,  merely  two 
aspects  of  the  one  problem  of  furnisTiing  to  the  public  a  continuing 
supply  of  animal  food  at  fair  prices.  The  welfare  of  the  live-stock 
producers  and  the  welfare  of  the  packers  are  of  public  concern 
merely  as  they  influence  the  permanent  and  practical  problem  of 
producing  meat  and  distributing  the  same  to  the  consumers,  the 
meat  to  be  of  the  quality  and  quantity  desired,  at  the  time  desired, 
and  at  a  fair  price  for  each  service  rendered. 

365 


366  LIVE-STOCK  AND  MEAT  INDUSTRY 

Meat  a  Dear  Food. — Meat  is  among  the  most  expensive  foods 
of  mankind.  As  population  increases,  and  cheap  lands  disappear, 
the  live-stock  increase  fails  to  keep  pace  with  the  population 
increase.  The  live-stock  industry,  or  at  least  the  cattle  and  sheep 
industry,  is  characteristic  of  sparsely  settled  countries — empty 
countries  with  plenty  of  ranges  for  grazing  purposes.  In  the  past, 
at  any  rate,  cattle  and  sheep  raising  has  been  a  matter  of  extensive 
rather  than  of  intensive  farming. 

Westward  Movement  of  Live-stock  Industry. — The  develop- 
ment of  manufacturing  in  the  East  and  the  consequent  growth 
of  large  cities  there  have  made  it  impossible  for  the  farms  of  that 
section  to  supply  their  population  with  food.  The  grazing  lands 
demanded  for  the  raising  of  cattle  and  sheep  are  found  in  the  West. 
The  center  of  the  production  of  corn  and  hay  has  moved  to  the 
more  fertile  lands  of  the  Mississippi  Valley.  The  fat  cattle  and 
hogs  are  fed  in  this  section — over  a  thousand  miles  from  the 
great  cities  of  the  seaboard.  To  reduce  transportation  costs, 
the  dressed  meats  rather  than  the  live  animals  are  shipped 
east  for  consumption,  and  thus  it  is  that  the  slaughtering 
business  has  moved  westward  with  the  live-stock  industry.  The 
dressed  beef,  for  instance,  weighs  55  per  cent  of  the  live  beef, 
the  remaining  forty-five  per  cent  of  the  animal  going  into  by- 
products or  waste. 

Shifts. — Taking  the  twenty-year  period,  1880-1900,  as  repre- 
sentative, we  find  shifts  occurring  as  follows  in  various  branches 
of  the  live-stock  industry:  (1)  Practically  the  only  sections  of  the 
country  showing  an  increase  in  the  number  of  cattle  on  farms  were 
those  west  of  the  Mississippi.  Here  the  number  rose  75  per  cent. 
The  States  east  of  the  Mississippi,  on  the  other  hand,  showed 
an  actual  decrease  in  the  number  of  cattle  of  over  a  million  and 
a  quarter  head.  In  1880,  47  per  cent  of  the  cattle  were  west  of 
the  Mississippi;  in  1900,  the  number  was  62  per  cent.  The  East 
of  necessity  furnishes  whole  milk  to  its  city  population,  which 
necessitates  a  large  number  of  dairy  cattle,  and  a  large  slaughter 
of  calves  and  of  culls  from  dairy  herds.  In  the  year  1900,  72  per 
cent  of  the  steers  one  year  of  age  and  over  were  west  of  the  Missis- 
sippi, and  85  per  cent  of  the  cows  two  years  of  age  and  over  not 
used  for  dairy  purposes.  In  short,  the  beef  industry  had  moved 
west  of  the  Mississippi.  (2)  Much  the  greater  part  of  the  increase 
in  the  number  of  swine  from  1880  to  1900  was  in  States  west  of  the 
Mississippi.  These  western  States  had  39  per  cent  of  the  swine 
in  1880  and  50  per  cent  in  1900.    (3)  There  has  been  a  very  marked 


OUTLOOK  FOR  THE  FUTURE  OF  LIVE  STOCK  367 

decrease  in  the  number  of  sheep  in  the  section  east  of  the  Missis- 
sippi, the  shrink  amounting  to  about  8,000,000  head  in  20  years. 
In  1880,  51  per  cent  of  the  sheep  were  west  of  the  Mississippi; 
in  1900,  68  per  cent  were  found  there.  The  west  showed  an  increase 
of  five  and  a  half  miUion  head  of  sheep  in  these  twenty  years. 

Live-stock  Countries. — Live-stock  production  follows  the  open 
country,  not  only  in  the  United  States,  but  also  in  other  countries. 
Thus  it  is  that  the  five  other  surplus  meat  countries,  besides  the 
United  States,  are  Argentina,  Australia,  Canada,  New  Zealand, 
and  Uruguay.  Denmark,  by  reason  of  her  bacon  export  is  a  factor 
of  importance,  but  Denmark  is  unimportant  as  a  beef  or  mutton 
producing  country,  and  hence  is  no  exception  to  the  above  rule. 

Decrease  in  Number  of  Live  Stock. — In  the  United  States  it 
was  a  matter  of  much  comment,  prior  to  the  World  War,  that  live- 
stock population  was  not  increasing  at  so  fast  a  rate  as  the  human 
population.  While  maintaining  large  exports  of  pork  products, 
we  also  became  in  certain  months  a  large  importer  of  meat. 

Using  the  figiu-es  published  by  the  United  States  Department 
of  Agriculture  in  its  Report  on  the  Meat  Situation  in  the  United 
States,  we  have  the  following  facts  regarding  live-stock  production : 
On  the  basis  of  the  number  of  animals  per  100  people,  the  returns 
for  70  years  are  as  follows: 

I.  Cattle 

1840-  88  animals        1870-62         1900-89  June  1. 
1850-  77  1880-72  1910-71  April  15. 

1860-  81  1890-82         1914-57  January  1.* 

II.  Sheep 

1840-113  animals        1870-74  1900-81  June  1. 

1850-  94  1880-70         1910-57  AprU  15. 

1860-  71  1890-57         1914-50  January  1.* 

III.  Hogs 

1840-154  animals        1870-65         1900-83  June  1. 
1850-131  1880-95         1910-63  April  15. 

1860-107  1890-91  1914-60  January  1.* 

*  Figures  for  January  1,  1914,  omit  crop  of  calves,  lambs,  and  pigs,  and  hence  are  not 
comparable  with  figures  for  1910  or  1900.  In  this  connection  mention  must  be  made  of  the 
tremendous  increase  in  Hvestock  production  from  1914  to  1918,  under  war  conditions,  show- 
ing the  possibilities  in  this  field  of  agriculture. 

In  the  United  States,  and  in  the  rest  of  the  world,  meat  is 
becoming  a  relatively  scarce  article  of  diet.  However,  this  may  be 
merely  a  temporary  reaction  from  our  glutting  the  markets  thirty 
years  ago. 

Outlook  for  the  Future  of  Live  Stock. — With  the  passing  of 
cheap  lands  and  of  the  great  open  ranges  of  the  West,,  the  question 
of  our  future  live-stock  supply  becomes  a  serious  one.  Will  we 
maintain  our  live-stock  production?    And  if  so,  how?    The  packers, 


368  LIVE-STOCK  AND  MEAT  INDUSTRY 

the  railroads,  the  bankers,  the  Federal  and  State  governments 
and  many  other  interests  are  now  cooperating  with  the  farmers 
for  the  purpose  of  increasing  the  number  and  improving  the  breed 
of  live  stock.  The  factors  making  for  and  the  factors  making 
against  an  increase  may  be  considered  in  turn. 

(1)  For  an  Increase.— The  breeding  of  cattle  and  sheep  on  the 
ranges  represents  one  phase  of  extensive  agriculture.  But  inten- 
sive agriculture  is  gradually  encroaching  on  this  area.  This  means 
that  the  breeding  of  live  stock  will  need  to  shift  to  the  more  inten- 
sive form  of  agriculture,  in  most  cases,  if  any  increase  is  to  be 
expected.  The  problem  of  an  increase  is  therefore,  a  two-fold  one, 
namely,  an  increase  in  live  stock  in  the  so-called  range  country  of 
the  West,  and  an  increase  in  livestock  in  the  farming  sections  of 
the  rest  of  the  country.  The  Federal  Department  of  Agriculture 
made  an  optimistic  report  in  the  year  1916  on  the  subject  ** Live- 
stock Production  in  the  Eleven  Far  Western  Range  States."  In 
these  eleven  States  (Arizona,  California,  Colorado,  Idaho,  Mon- 
ana,  Nevada,  New  Mexico,  Oregon,  Utah,  Washington  and 
Wyoming)  the  investigators  for  the  Government  found  a  dechne 
of  13  per  'cent  in  the  number  of  live  stock  between  the  years  1910 
and  1914.  This  decline  was  attributed  to  the  settlement  of  pubUc 
lands  and  the  consequent  reduction  of  the  range.  However,  in 
spite  of  this  actual  decline,  the  prediction  was  made  that  this 
decrease  would  in  the  future  give  way  to  an  actual  increase.  The 
belief  in  an  increase  was  based  on  the  probability  that  the  number 
of  live  stock  on  farms  would  be  greater  in  the  future ;  that  the  stock 
ranges  in  the  national  forests  would  continue  to  improve ;  that  the 
carrying  capacity  of  the  range  on  the  public  domain  would  be 
increased  by  legal  regulations;  and  that,  finally,  better  and  more 
scientific  use  would  be  made  of  forage.  The  Government's  opti- 
mistic prediction  is  based  on  the  calculation  that  the  carrying 
capacity  of  the  forest  reserves  can  be  increased  by  15  per  cent,  and 
of  the  public  domain  by  30  per  cent.  Some  consideration  is  also 
given  to  the  use  of  better  sires,  and  to  more  scientific  feeding 
methods.  The  chief  conclusions  reached  by  this  federal  investi- 
gation are,  to  sum  up,  that  hereafter  there  should  be  a  slow  increase 
in  the  output  of  beef  and  mutton  in  the  range  States  of  the  West, 
but  that  this  increase  is  likely  to  be  accompanied  by  an  increase 
in  the  cost  of  production.  However,  the  problem  of  live  stock 
increase  cannot  be  solved  by  the  eleven  range  States  alone.  As 
one  of  our  leading  publicists,  Easton  G.  Osman,  states  it,  ''The 
future  of  meat  depends  on  intensive  agriculture  rather  than  exten- 


AGAINST  AN  INCREASE  369 

sive  grazing."  ^  The  limiting  factor  in  producing  live  stock  under 
conditions  of  intensive  agriculture  is  of  course  the  cost  of  the  teed. 
This  comparatively  simple  problem  is  further  complicated  by  the 
farm  management  problems  of  crop  rotation  systems  and  the 
maintenance  of  soil  fertility  by  the  use  of  manure.  Doubtless  in 
many  cases  where  the  original  range  has  been  put  under  the  plow 
and  alfalfa  or  other  forms  of  tame  hay  substituted  for  the  wild 
hay,  there  has  followed  an  actual  increase  in  the  amount  of  live- 
stock feed  produced.  It  is  also  true  that  much  original  range  has 
been  plowed  with  disastrous  results.  Aside  from  hay  and  corn, 
the  principal  feeds  now  used  in  fattening  (or  ^'finishing")  cattle 
for  the  market,  there  is  a  rapidly  swelling  list  of  feeding  stuffs 
coming  onto  the  market.  The  Department  of  Agriculture,  in 
reporting  on  the  ''Meat  Situation  in  the  United  States,"  issues 
one  report  on  the  subject,  "Utilization  and  Efficiency  of  Available 
American  Feed  Stuffs."  In  this  report  consideration  was  given 
to  the  following  feeding  stuffs:  straw,  corn  stover,  cottonseed 
meal  and  cake,  linseed  meal  and  cake,  soy  bean  cake,  peanut  cake, 
sesame  cake,  copra  (cocoanut  by-products),  palm-nut  meal,  winter 
wheat  and  winter  oats  as  grazing  crops,  spineless  cactus,  sugar 
cane,  feterita,  sudan  grass,  teosinte,  velvet  bean,  kudzu  vine,  sweet 
clover,  cassava,  beggar  weed,  rape,  roots  (mangels,  beets,  turnips), 
silage,  canning  factory  refuse,  beet  pulp,  sugar  cane,  and  molasses. 
Corn  and  corn  products  and  alfalfa  and  alfalfa  products  are,  of 
course,  the  important  feed  stuffs  in  the  region  contiguous  to  the 
great  packing  centers.  It  is  obvious  that  an  intensive  agriculture 
can  furnish  more  and  better  live  stock  than  can  extensive  agri- 
culture. But  the  comparative  costs  cannot  be  calculated  in 
advance.  The  tendency  is  for  cities  to  increase  in  population 
faster  than  rural  districts,  and  for  manufacturing  to  assume 
greater  and  greater  importance.  And  the  by-products  of  many 
lines  of  manufacture  furnish  feed  for  live  stock,  such  for  instance, 
as  the  by-products  of  the  various  oil-bearing  seeds.  It  is  impos- 
sible to  predict  the  future  development  of  commercial  manufac- 
tured feed  stuffs,  or  even  the  changes  in  method  of  preparing 
and  feeding  silage. 

(2)  Against  an  Increase. — There  are  at  least  three  factors 
which  make  against  any  substantial  increase  in  the  number  of 
live  stock  in  the  United  States — disease,  substitution  of  vegetable 
oils  for  animal  fats  and  oils,  and  the  increase  in  tenancy.  Disease 
is  an  important  factor  repressing  meat  production.    The  packers 

1  Editorial,  Price  Current  Grain-Reporter,  Chicago.    July  31,  1918,  p.  7. 
24 


370  LIVE-STOCK  AND  MEAT  INDUSTRY 

have  aided  other  interests  in  a  campaign  against  tuberculosis, 
which  is  rampant  in  dairy  sections.  West  of  the  Missouri  River 
contagious  abortion  is  a  more  serious  menace  to  cattle  production. 
In  the  South  the  so-called  Texas  tick  is  a  serious  handicap.  Hog 
cholera,  the  deadliest  foe  of  swine,  is  only  partially  under  control 
by  vaccination/V  \  Sheep  on  higher  altitudes  are  comparatively 
healthy,  while  at  lower  altitudes  internal  parasites  and  other 
ailments  play  havoc  with  flocks.  Lack  of  care  in  winter  is  also 
a  cause  of  many  severe  losses. 

On  the  demand  side  of  the  market  we  are  confronted  with  the 
fact  that  the  people  are  eating  less  meat  and  more  meat  substitutes. 
Vegetable  fats  and  oils  are  very  rapidly  establishing  themselves 
in  the  dietary  of  the  people.  The  nations  which  do  consume  less 
meat  and  more  meat  substitutes  fail  to  show  any  loss  in  physical 
stamina  thereby.  The  average  annual  meat  consumption,  per 
capita,  of  the  meat  eating  countries  of  the  world  is  93.3  pounds  of 
beef,  mutton  and  pork.  In  the  United  States  the  meat  consump- 
tion decreased  from  181.5  pounds  in  1900  to  170.6  pounds  in  1909. 
Only  two  countries  exceed  this — Australia,  263  pounds  (in  1902) 
and  New  Zealand  212  pounds  (in  1902).  In  1906  the  consumption 
of  meat  in  the  United  Kingdom  amounted  to  125  pounds  per 
capita;  in  France,  in  1904,  to  77  pounds;  in  Germany  in  1913,  to 
100  pounds.^  The  most  serious  factor  of  all  making  against  an 
increase  in  live  stock  is  the  long-continued  and  steady  increase  in 
tenancy  in  the  United  States.  Renters  do  not  raise  live  stock, 
especially  the  short-term  renters,  which  is  the  class  known  in  this 
country.  The  tenant  is  not  interested  in  live  stock  from  the  stand- 
point of  maintaining  the  fertility  of  the  soil,  for  it  is  not  his  soil. 
He  is  concerned  chiefly  with  a  ''cash  crop."  He  is  not  therefore 
concerned  with  a  rotation  system  in  which  live  stock  forms  a  part. 

Summing  up  the  arguments  for  and  against  the  probable 
increase  in  the  number  of  live  stock  in  the  United  States,  it  seems 
that  the  argimients  against  an  increase  outweigh  the  arguments 
for  an  increase. 

Foreign  Competition. — Foreign  competition  is  taking  the  form 
both  of  producing  live  stock  and  of  packing  meat  for  the  market. 
So  far  as  South  America  is  concerned,  this  competition  is  largely 
by  transplanted  American  men  and  American  capital.  Thus  in 
1912  Murdo  McKenzie  of  Texas  and  Denver,  America's  most 
prominent  cattleman,  went  to  Brazil  to  develop  the  cattle  resources 

2  Meat  Situation  in  the  United  States.  Report  109,  United  States  De- 
partment of  Agriculture,  pp.  16,  17.    Washington,  1916. 


FOREIGN  COMPETITION  371 

of  that  country.^  The  live  stock  census  of  1913  gave  Brazil 
30,705,000  head  of  cattle,  10,653,000  sheep,  and  18,399,000  hogs. 
The  Brazilian  government  is  offering  substantial  encouragement 
to  breeders  of  cattle  in  order  to  improve  the  strain.  Argentina 
has  long  been  famous  as  a  country  which  imports  very  expensive 
pure  bred  sires  from  England,  and  which  has  made  much  progress 
in  breeding  pure-bred  cattle.  Australia,  New  Zealand,  and  South 
Africa  are  also  important  market  factors  in  producing  live  stock 
and  exporting  surplus  meat. 

It  was  not  until  1901,  when  the  exports  of  beef  from  the  United 
States  began  to  decline  materially,  that  exports  of  Argentine  beef  be- 
gan to  assume  commercial  importance.  Since  that  date  the  increase 
has  been  steady  and  rapid.  The  export  of  foreign  mutton  was  left  to 
Austraha  and  New  Zealand,  which  already  dominated  that  field,  and 
the  beef  industry,  rather  than  pork,  received  Argentina's  attention. 
During  the  years  1908  to  1914,  however,  there  was  an  increase  in 
Argentina's  hog  crop  and  a  decrease  in  the  cattle  and  sheep  crop. 
The  large  American  packers  have  established  meat  packing 
plants  in  foreign  countries  as  follows.^ 
Armour  and  Company. 

Armour  &  Company  of  Australasia  (Australia  and  New  Zealand). 

Armour  &  Company  of  Uruguay. 

Compania  Armour  do  Brazil. 

Frigorifico  Armour  de  la  Plata  (Argentina). 
Cudahy  Packing  Company. 

Cudahy  &  Company,  Limited,  Australia. 
Swift  &  Company. 

Australian  Meat  Export  Company,  Limited,  Australia. 

Compania  Swift  do  Brazil. 

Compania  Swift  de  la  Plata  (Argentina). 

Compania  Swift  de  Montevideo  (Uruguay). 

Compania  Paraguaga  de  Frigorifico  (Paraguay). 
Wilson  &  Company,  Inc. 

Frigorifico  Wilson  de  la  Argentina  (Argentina). 
Armour  &  Morris. 

Sociedad  Anonima  La  Blanca  (Argentina). 

The  United  States  for  many  years  enjoyed  first  place  as  an 
exporter  of  beef.  First  place  has  now  passed  to  Argentina,  with 
the  United  States  second  and  Australia  third.    Argentina  forged 

2  Murdo  McKenzie,  in  the  course  of  an  address  at  the  annual  meeting 
of  the  cattlemen  at  the  Kansas  State  Agricultural  College,  spoke  of  the  possi- 
bihty  of  extending  the  hve  stock  trade  in  South  America,  particularly  in  Brazil. 
Tuberculosis  he  named  as  the  big  evil  in  cattle.  His  company,  he  said,  had 
bought  750,000  acres  of  land  at  29  cents  an  acre  and  another  large  tract  at 
89  cents  an  acre,  land  equal  to  any  land  in  Kansas. — Wallace^s  Farmer,  June 
22,  1917,  p.  4. 

4  Summary  of  the  Report  of  the  Federal  Trade  Commission  on  the  Meat 
Packing  Industry,  p.  12.    Washington,  1918. 


372 


LIVE-STOCK  AND  MEAT  INDUSTRY 


steadily  ahead  and  permanently  passed  the  United  States  in  exports 
of  beef  in  1909.  The  lead  was  held  through  the  World  War,  al- 
though both  Australia  and  the  United  States  made  incredibly 
large  increase  in  exports  to  meet  the  needs  of  the  Allies.    The 


■ mr'^-ftiilii. 

Fia.  74. — The  Cliicago  stock  yard  in  1861. 


Fig.  75. — The  Chicago  stock  yards  fifty  years  later. 

average  yearly  exports  of  beef  from  these  three  countries  together 
increased  from  925,000,000  pounds  in  1895-1904  to  1,344,000,000 
pounds  in  1905-1914,  and  to  1,909,000,000  pounds  in  1915-1917. 
This  huge  feat  was  performed  by  the  combined  efforts  of  producers 
and  packers. 

The  Meat  Packing  Industry. — The  meat  packing  industry  is 
one  of  the  best  examples  of  large-scale  production  in  the  United 


A  LARGE-SCALE  BUSINESS 


373 


States  (Figs.  74  and  75).  One  of  the  severest  indictments  brought 
against  the  competitive  regime  by  the  SociaHsts  is  the  wastes  of 
competition.  The  meat  packing  business,  as  now  conducted  by 
the  five  large-scale  packing  concerns  is  a  business  which  has  gone 
a  long  way  towards  eliminating  the  wastes  incident  to  competition. 
And  in  arriving  at  the  point  of  ''large-scale  production,"  the  meat 
packing  industry  has  challenged  certain  economic  and  legal 
doctrines  of  the  country. 

A  Large-Scale  Business. — While  there  are  many  small  slaugh- 
tering establishments  throughout  the  United  States  and  an  increas- 
ing number  of  municipal  abattoirs,  yet  the  high  position  of  size 


in 


^'^^^^^kmm^. 


Fig.   76. — Evolution  of  the  packing  industry.     The  first  plant  of  a  big  Chicago  packer. 

attained  by  five  of  the  largest  packers  makes  the  packing  industry 
in  reality  a  large-scale  business  (Figs.  76  and  77) .  It  is  estimated 
that  five  companies  now  kill  70  per  cent  of  the  live  stock  slaughtered 
by  all  packers  and  butchers  engaged  in  interstate  commerce,  which 
amounts  to  forty  per  cent  of  the  total  meat  supply  of  the  country. 
The  largest  single  packer  handles  15  per  cent  of  the  total  meat 
supply  of  the  country.  According  to  the  federal  government's 
figures,  there  is  only  one  packer,  outside  the  five  large  ones,  who 
slaughters  as  much  as  one  per  cent  of  the  interstate  total  of  cattle, 
and  only  nine  who  slaughter  as  much  as  one  per  cent  of  the  inter- 
state total  of  hogs.  In  other  words,  the  30  per  cent  of -the  live  stock 
slaughtered  by  ''small-scale  business"  concerns  is  slaughtered  by  a 
large  number  of  relatively  very  small  concerns.  Of  course  there 
is  a  vast  volume  of  cattle  and  hogs  slaughtered  by  local  butchers 


374 


LIVE-STOCK  AND  MEAT  INDUSTRY 


DIVISION  OF  LABOR  375 

for  their  city  trade  which  does  not  figure  in  the  above  calculations, 
not  entering  into  interstate  commerce.  The  five  large  companies 
own  and  operate  packing  houses  at  the  following  points :  Chicago, 
Kansas  City,  South  Omaha,  St.  Joseph,  St.  Louis  and  East  St. 
Louis,  South  St.  Paul,  Fort  Worth,  New  York,  Sioux  City,  Los 
Angeles,  Denver,  Oklahoma  City,  Portland  (Oregon),  Cleveland, 
Andalusia  (Alabama),  Moultrie  (Georgia),  Harrisburg,  Milwaukee, 
Albert  Lea,  Wichita.  The  advantages  of  large-scale  production 
in  meat  packing  are  evidenced  in  five  ways,  namely,  division  of 
labor,  utilization  of  by-products,  better  transportation  and  market 
distribution,  better  inspection  and  grading,  and  the  number  of 
''side  lines"  economically  carried.  The  final  economic  test  of  the 
big  packers  is :  Do  they  function  economically  in  getting  the  live 
stock  of  the  West  to  the  cities  of  the  East? 

(1)  Division  of  Labor. — Slaughtering  on  the  farm  or  at  the 
butcher  shop  is  commonly  done  by  two  men.  In  this  way  two  men 
can  butcher  two  animals  in  ten  hours.  But  in  the  big  packing 
house  the  work  is  done  by  a  ''gang"  consisting  of  about  150  men, 
who  in  ten  hours  handle  more  than  a  thousand  cattle.  In  other 
words,  by  increasing  the  size  of  the  gang  seventy-five  fold  the 
packers  increase  the  output  five  hundred  fold.  For  instance,  in  a 
large  Chicago  packing  plant  a  gang  of  157  men,  by  the  minute 
division  of  labor  in  use  there,  were  able  to  handle  in  a  typical 
working  day  of  ten  hours  1050  cattle.  The  work  was  divided  as 
follows:  1  general  foreman;  1  foreman  over  yard  gang;  1  driver  up; 

2  penners;  2  knockers;  2  shacklers;  1  hanger  off  for  shackler; 
1  squeezing  blood  from  beds;  1  switcher  onto  heading  beds  and 
putting  up  heads;  1  throwing  down  heads;  1  pritcher  up;  1  dropper; 
1  pritcher  up  helper;  1  sticker;  3  headers;  1  ripper;  4  leg  breakers; 

3  feet  skinners;  1  gullet  raiser;  7  floormen;  1  breast  sawyer;  1  aitch 
sawyer;  23^  caul  pullers;  2  putting  in  hooks  to  hoists  for  fell  cutter; 
1  floor  squeezer;  1  washing  crutches  and  bellies;  4  fell  cutters; 
1  cutting  out  bladders;  2  rumpers;  1  rump  helper  and  drop  hide 
feller;  2  backers;  4  splitters;  1  back  and  rump  hand;  1  washing 
hind  shanks;  1  ripping  tails  and  cutting  out;  1.  puUing  tails;  23^ 
gutters;  2  throwing  down  guts  and  paunches;  3  tail  sawyers;  2 
hanging  off  from  splitter;  3  beating  out  fells;  1  helper  sawdng  tails 
and  ripping  open;  2  neck  spUtters;  1  tallow  lot  man;  1  trucking 
feet;  1  trucking  up  hocks;  1  hanging  up  hooks;  2^  clearing  out; 
3  dropping  hides;  washing  gang  as  follows:  1  foreman;  1  trimmer; 
1  wiper;  1  putting  in  neck  and  kidney  cloths;  1  scribe  sawyer;  1 
hoseman;  1  washing  shanks;  1  switchman;  3  washing  ribs  and  necks 


376  LIVE-STOCK  AND  MEAT  INDUSTRY 

inside;  1  squeezing  beef;  1  pumping  kidneys;  3  long  brush  washers; 
1  washing  rags;  2  wiping  hinds;  2  ladder  men  (knife) ;  2  bruise  trim- 
mei*s;  1  cutting  off  cords  and  shanks;  1  tying  veins;  2  trimming 
skirts  and  necks;  1  pumping  necks;  Weighing  beef  and  helpers  as 
follows:  1  scaler;  1  grader;  1  pushing  on  scale  or  tagger;  1  pulhng  off 
scale;  1  elevator  man;  Refrigerating  and  car  loading  as  follows: 
14  beef  coolers;  5  trimmers;  7  carriers  and  loaders;  11  laborers. 
Such  division  of  labor  means  that  highly  skilled  workers  are 
put  on  speciahzed  jobs,  and  cheaper  and  less  skilled  labor  is  em- 
ployed on  the  simpler  jobs.  In  this  way  the  utmost  economy  of 
time  and  effort  is  secured. 

(2)  Utilization  of  By-products. — It  is  literally  true  that  no 
part  of  the  animal  entering  the  large  packing  house  is  wasted. 
The  blood  that  falls  on  the  floor  passes  down  a  chute  and  goes 
into  fertilizer.  During  the  World  War  blood  was  also  made  into 
albumen  which  was  in  turn  used  in  the  manufacture  of  airplanes. 
Hair,  hide,  bones,  all  are  utilized.  Liver,  sweetbread,  brains, 
tongue,  heart,  tail — all  find  their  way  into  hmnan  foodstuffs. 
Buttons,  knife  handles,  glue,  gelatin,  soap,  curled  hair,  brewers' 
isinglass,  sandpaper,  music  strings,  combs,  artificial  teeth,  pipe 
stems — these  and  many  other  commercial  articles  are  by-products 
of  the  packing  house.  One  of  the  large  Chicago  packers  makes 
the  statement  that  his  company  sells  the  dressed  meat  from  a 
steer  for  less  than  the  live  animal  cost  on  the  hoof.  Thus,  as  a 
typical  example,  a  1,000-pound  steer  was  bought  by  this  packer 
in  September,  1918,  for  $160.00,  and  from  it  565  pounds  of  dressed 
beef  were  obtained.  This  beef  was  sold  at  wholesale  for  $141.25. 
The  hide  sold  for  $15.75 — a  total  for  the  beef  and  hide  of  $157  or 
three  dollars  less  than  the  cost  of  the  live  animal.  The  cost  of 
slaughtering,  dressing,  and  distributing  was  $5.79  more,  or  a  total 
deficit  of  $8.79.  The  by-products  of  this  steer  in  addition  to  the 
hide,  however,  amounted  to  $9.77,  leaving  a  profit  of  98  cents  on 
the  animal.  The  by-product  business  is  one  feature  of  the  large- 
scale  production,  and  means,  in  the  case  of  the  packers,  the  fruits 
of  much  experimentation,  the  development  of  private  laboratories, 
and  the  work  of  scientists.  This  is  particularly  true  of  the  chemical 
and  medical  preparations  developed  in  the  packing  houses,  such  as 
pancreatin,  thyroids,  supra-renal,  pineal  substance,  thrombo- 
plastin, and  so  on.  Practically  all  these  by-products  are  entirely 
wasted  in  the  small  packing  houses. 

(3)  Transportation  and  Distribution. — ^The  large  packers  own 
their  own  refrigerator  cars  and  have  volume  enough  of  business 


LEGAL  AND  ECONOMIC  QUESTIONS 


377 


to  send  out  full  loads  under  ice  to  distant  markets.  They  own 
'iheir  own  branch  houses  which  sell  direct  to  retail  stores.  Market 
gluts  can  thus  be  avoided  by  shipping  promptly  to  points  of  great- 
est scarcity.  Car  routes  reach  towns  which  are  not  handled  from 
branch  houses. 

(4)  Inspection  and  Grading. — The  large  packing  houses  make 
government  inspection  feasible  (Figs.  78  and  79).  The  govern- 
ment stamp  on  meat  has  come  to  be  looked  upon' as  a  guarantee  of 
the  health  of  the  animal.    The  large-scale  business  also  permits 


w 

Fig.  78. — Private  chemical  laboratory  of  a  big  packing  house. 

the  packer  to  furnish  any  consuming  market  the  quaUty  as  well  as 
the  quantity  of  meat  desired,  and  at  any  time  desired. 

(5)  Side  Lines. — The  facilities  for  conducting  the  meat  pack- 
ing business  and  for  distributing  it  by  fast  refrigerator  car  service, 
through  branch  houses  in  all  population  centers,  also  enable  the 
packers  to  handle  many  side  lines  with  economy  of  time  and  money, 
with  mimimum  of  overhead  expense. 

Legal  and  Economic  Questions. — ^The  forefathers  who  drew 
up  the  Maryland  Constitution  of  1776  inserted  these  words: 

"That  monopolies  are  odious,  contrary  to  the  spirit  of  a  free  government, 
and  the  principles  of  commerce,  and  ought  not  to  be  suffered." 


378 


LIVE-STOCK  AND  MEAT  INDUSTRY 


Forty-one  days  before  the  writing  of  these  words  bj^  the  Mary- 
land fathers,  the  Continental  Congress  had  adopted  the  Declara- 
tion of  Independence,  marking  the  severance  of  the  new  Republic 
from  the  Old  King.  Autocratic  political  power  was  the  thing 
abhorred  by  the  people  of  the  New  World.    In  the  century  and  a 


FiQ.  79. — Government  inspection  of  meat  in  a  large  packing  house. 

half  which  has  elapsed  since  that  struggle  began  autocratic  political 
power  has  nearly  vanished  from  the  whole  world.  The  same  in- 
stinct of  abhorrence  towards  autocratic  political  power  which  then 
existed  now  continues  as  an  instinct  against  autocratic  economic 
power.  And  so,  in  the  last  third  of  a  century,  we  have  seen  the 
power  of  the  federal  courts  invoked  against  the  great  consolidated 
business  units  operating  in  sugar,  steel,  oil,  tobacco,  harvesting 


"BIG  SIX"  AND  THEIR  CAPITALIZATION  379 

machinery,  and  meat  packing.  Whether  this  instinct  is  now  wise 
or  unwise,  whether  well  founded  or  ill  founded,  is  not  a  profitable 
question  to  debate.  The  existence  of  such  an  instinct  must  be 
taken  for  granted.  The  existence  of  this  instinct  explains  the  per- 
sistent demand  on  the  part  of  the  people  that  the  government  *'do 
something"  with  this  great  economic  problem.  Granting  that  the 
mere  bigness  of  these  various  large-scale  industrial  corporations 
gives  them  power,  does  it  also  give  them  autocratic  power?  And  do 
they  use  this  big  power  so  that  society  benefits  thereby  or  so  that 
society  suffers  thereby?  These  are  some  of  the  politico-economic 
questions  underlying  this  phase  of  our  nation's  development. 

The  meat  packing  industry  has  been  subject  to  many  investi- 
gations. State  and  Federal.  Out  of  this  vast  mass  of  material  of 
lawsuits,  hearings,  investigations,  injunctions,  regulations,  and  so 
on,  two  investigations  only  will  be  reviewed  here,  since  they  bring 
out  the  fundamental  issues  which  must  be  faced  and  settled. 

The  Garfield  Report. — The  Report  of  the  Commissioner  of 
Corporations  in  1905,  known  as  the  Garfield  Report,  was  made  in 
response  to  a  Resolution  passed  by  the  House  of  Representatives 
March  7,  1904.  The  Resolution  stated  the  object  of  the  investiga- 
tion as  follows : 

"Resolved,  that  the  Secretary  of  Commerce  and  Labor  be,  and  he  is 
hereby,  requested  to  investigate  the  cause  of  the  low  prices  of  beef  cattle  in 
the  United  States  since  July  first,  nineteen  hundred  and  three,  and  the  un- 
usually large  margins  between  the  prices  of  beef  cattle  and  the  selling  prices 
of  fresh  beef,  and  whether  the  said  conditions  have  resulted  in  whole  or  in 
part  from  any  contract,  combination,  in  the  form  of  a  trust  or  otherwise,  or 
conspiracy,  in  restraint  of  commerce  among  the  several  States  and  Territories 
or  with  foreign  countries;  also  whether  the  said  prices  have  been  controlled 
in  whole  or  in  part  by  any  corporation,  joint  stock  company,  or  corporate 
combination  engaged  in  commerce  among  the  several  States  or  with  foreign 
nations;  and  if  so,  to  investigate  the  organizations,  companies,  and  corporate 
combinations,  and  to  make  early  report  of  his  findings  according  to  law," 

Accordingly  the  report  on  ''The  Beef  Industry"  was  the  first 
report  issued  by  the  new  Bureau  of  Corporations  in  the  movement 
against  the  ''Trusts"  initiated  by  President  Roosevelt.  The  chief 
findings  of  this  Report  are  as  follows. 

(1)  "Big  Six"  and  Their  Capitalization.— By  far  the  most 
important  concerns  in  the  beef  business  were  the  following  com- 
panies, frequently  designated  in  the  trade  as  the  "Big  Six" 

Name  Capitalization 

Armour  &  Company $20,000,000  . 

Armour  Packing  Company 7,500,000 

Swift  &  Company 35,000,000 

Morris  &  Company 3,000,000 

National  Packing  Company 15,000,000 

Scwarzschild  &  Sulzberger 4,373,400 

Cudahy  Packing  Company 7,500,000 


380  LIVE-STOCK  AND  MEAT  INDUSTRY 

*'It  appears,"  says  the  Report,  ''reasonably  clear  that  the  capital- 
ization of  none  of  these  companies  is  excessive  as  compared  with 
its  actual  investments."  In  other  words,  there  was  found  no 
watered  stock. 

(2)  Extent  of  Control. — "  The  six  concerns  described  are 
almost  the  only  extensive  shippers  of  dressed  beef;  that  is,  they 
are  almost  the  only  concerns  which  slaughter  cattle  in  the  great 
western  markets  and  transport  the  product  elsewhere  for  consump- 
tion. At  the  same  time  these  companies  do  a  smaller  proportion 
of  the  beef  business  of  the  country  than  is  ordinarily  supposed, 
and  comparatively  narrow  limits  are  placed  upon  the  control  which 
they  could,  even  if  they  acted  in  harmony,  exercise  over  the  prices 
of  cattle  and  of  beef." 

The  Bureau  estimated  that  in  1903  there  were  slaughtered  in 
the  United  States  12,500,000  head  of  cattle,  of  which  these  six 
companies  slaughtered  5,521,697  or  45  per  cent.  On  the  other 
hand,  these  concerns  slaughtered  98  per  cent  of  the  cattle  killed 
in  the  eight  leading  western  packing  centers — Chicago,  Kansas 
City,  South  Omaha,  East  St.  Louis,  South  St.  Joseph,  Fort  Worth, 
Sioux  City,  and  South  St.  Paul.  The  proportion  of  beef  consump- 
tion which  was  furnished  by  these  packers  varied  greatly  with 
different  cities  and  sections.  The  area  east  of  Pittsburg  differed 
greatly  from  the  area  west  of  Pittsburg.  In  New  York  these 
packers  furnished  about  75  per  cent  of  the  beef  consumed;  in 
Boston,  85  per  cent;  in  Philadelphia,  60  per  cent;  in  Provi- 
dence, 95  per  cent;  in  Baltimore,  50  per  cent;  Buffalo  and 
cities  west  (such  as  Cleveland,  Cincinnati,  and  Indianapolis) 
only  from  10  to  333^  per  cent.  In  the  dairy  sections  the 
dairy  industry  was  found  to  furnish  a  large  number  of  surplus 
cattle  for  slaughter. 

(3)  Potential  Competition. — On  this  subject  the  Report  says: 
''Should  the  western  packers  try  to  obtain  a  much  higher  per- 
centage of  profit  than  they  do  at  present,  existing  local  slaughter 
houses  at  all  consuming  points  would  tend  to  expand  their  busi- 
ness materially,  and  new  concerns  would  spring  into  existence. 
The  possibility  of  a  rapid  increase  in  competition  of  local  slaugh- 
terers was  illustrated  during  the  packing  house  strike  of  the  summer 
of  1904,  when  the  shortage  in  the  beef  furnished  by  the  western 
packers  was  to  a  very  considerable  extent  made  up  by  increased 
killing  on  the  part  of  small  concerns.  .  .  .  The  business  is  not 
controlled  by  patents,  secret  processes,  or  monopoly  of  raw 
material,  and  the  amount  of  capital  necessary  to  provide  even  a 


^ 


THE  PROFITS  381 

system  of  several  plants,  with  transportation  lines  and  marketing 
facilities,  is  not  so  large  as  seriously  to  hinder  new  competition 
in  case  a  very  high  margin  of  profit  should  be  maintained  by  the 
present  concerns." 

Little  fresh  beef  is  sold  to  dwellers  in  the  country.  In  fact  a 
large  proportion  of  the  packers'  beef  is  consumed  in  a  few  large 
cities.  The  packers  might  by  predatory  competition  and  price 
cutting  in  one  locaUty,  drive  out  a  competitor,  and  recoup  in  other 
localities.  But,  says  the  Report,  such  a  practice  was  unlikely, 
for  the  cutting  of  price  in  any  of  the  large  cities  would  mean  a 
general  reduction  in  that  entire  local  market. 

(4)  The  Price  Question. — ''During  the  year  from  July  1902, 
to  June  1903,  these  packers  slaughtered  at  the  selected  plants 
2,017,864  cattle.  The  average  live  weight  of  these  cattle  was 
1,092  pounds,  and  the  actual  average  cost  $4.45  per  hundredweight, 
the  cost  per  head  being  $48.58.  The  cost  of  operation  and  adminis- 
tration at  the  packing  plants  averaged  $1.90  per  head,  making 
the  total  cost  $50.48.  The  weight  of  the  beef  derived  from  these 
cattle  was  equal  to  55.68  per  cent  of  the  live  weight,  or  609  pounds 
per  head.  The  average  net  selling  price  of  the  beef  was  $6.47  per 
hundredweight,  or  $39.32  per  head.  The  net  value  of  by-products 
from  the  cattle  was  $11.96  per  head,  making  the  total  proceeds 
$51.28  per  head.  This  showed  an  average  profit  of  80  cents  per 
head,  or  13.1  cents  per  hundredweight  of  dressed  beef."  This  is  a 
profit  of  about  y^g  of  a  cent  a  pound  on  the  beef  sold. 

'Tor  the  year  from  July  1903  to  June,  1904,  the  computation 
covered  2,013,658  cattle.  The  average  live  weight  was  1,115 
pounds,  and  the  average  cost  at  $4.15  per  hundredweight  was 
$46.23  per  head,  the  total  cost,  including  killing,  etc.,  being  $48.19. 
The  average  selling  price  of  the  beef  was  $6.25,  or  $39.26  per  head, 
the  average  dressed  weight  being  629  pounds.  The  net  value  of 
by-products  was  $9.75  per  head,  or  more  than  $2  per  head  less 
than  in  the  preceding  year.  The  total  proceeds  of  the  beef  and 
the  by-products  were  $49.01,  leaving  a  profit  of  82  cents  per  head, 
equal  to  13.5  cents  per  hundredweight  of  dressed  beef." 

(5)  The  Profits. — This  Report  states  the  profits  of  two  of  the 
large  packers,  based  on  the  total  volume  of  the  year's  business, 
the  figures  for  Swift  &  Company  being  1.9  per  cent,  and  for  Cudahy 
&  Company  1.8  per  cent. 

The  1912  Case. — A  lawsuit  was  carried  through  the  courts  in 
1912,  with  a  regular  jury  trial,  to  decide  the  question  of  "monopoly 
control."    It  was  found  by  the  jury  that  no  monopoly  existed. 


382  LIVE-STOCK  AND  MEAT  INDUSTRY 

It  happened  that  1905  was  the  low-water  mark  in  the  value  of 
cattle,  and  from  that  date  on,  up  to  the  end  of  the  World  War,  there 
was  an  upward  trend  in  the  price  of  beef  cattle.  The  price,  how- 
ever, was  a  very  fluctuating  one,  so  that  the  live-stock  producers 
continued  to  feel  dissatisfaction  and  distrust  towards  the  packers. 
High  prices  of  beef  caused  the  consumers  to  feel  that  ''something 
was  wrong  somewhere."  Accordingly  the  President  in  1917 
addressed  a  letter  to  the  Federal  Trade  Commission,  dealing  with 
the  production  and  distribution  of  the  nation's  food  supply,  and 
containing  these  words: 

"Unjustifiable  fluctuations  in  prices  are  not  merely  demoralizing;  they 
inevitably  deter  adequate  production.  It  has  been  alleged  before  Committees 
of  Congress,  and  elsewhere,  that  the  course  of  trade  in  important  food  products 
is  not  free,  but  is  restricted  and  controlled  by  artificial  and  illegal  means.  It 
is  of  the  highest  public  concern  to  ascertain  the  truth  or  falsity  of  these  alle- 
gations. No  business  can  be  transacted  effectively  in  an  atmosphere  of  sus- 
picion. If  the  allegations  are  well-grounded,  it  is  necessary  that  the  nature 
and  extent  of  the  evils  and  abuses  be  accurately  determined,  so  that  proper 
remedies,  legislative  or  administrative,  may  be  apphed.  If  they  are  not  true, 
it  is  equally  essential  that  the  public  be  informed,  so  that  unrest  and  dissatis- 
faction may  be  allayed  ...  Therefore  I  direct  the  Commission,  within  the 
scope  of  its  powers,  to  investigate  and  report  the  facts  relating  to  the  produc- 
tion, ownership,  manufacture,  storage,  and  distribution  of  foodstuffs  and  the 
products  or  by-products  arising  from  or  in  connection  with  their  preparation 
and  manufacture;  to  ascertain  the  facts  bearing  on  alleged  violations  of  the 
anti-trust  acts,  and  particularly  upon  the  question  whether  there  are  manipu- 
lations, controls,  trusts,  combinations,  conspiracies,  or  restraints  of  trade  out 
of  harmony  with  the  law  or  the  pubhc  interest." 

Federal  Trade  Commission  Report,  1918. — The  Trade  Com- 
mission, after  a  year's  investigation,  stated  that  the  packing 
industry  was  dominated  by  five  concerns,  namely.  Armour  &  Com- 
pany, Swift  &  Company,  Morris  &  Company,  Wilson  &  Company, 
Inc.,  and  the  Cudahy  Packing  Company.  The  Commission  ex- 
amined witnesses,  held  public  hearings,  and  examined  minutely 
the  letters  and  memoranda  in  the  files  of  the  packers.  Unlike 
the  Garfield  Report,  this  Report  does  not  endeavor  to  explain 
the  margin  between  price  paid  for  live  cattle  and  price  received 
for  dressed  beef.  This  Report  is  concerned  chiefly  with  the 
magnitude  of  the  operations  of  the  packers  and  with  the  question 
of  a  "combination"  among  the  so-called  ''Big  Five." 

(1)  Magnitude  of  Business. — ^The  five  packers,  together  with 
their  subsidiaries  and  affiliated  concerns,  were  found  to  be  exten- 
sively engaged  in  purveying  other  foodstuffs  than  meat,  and  to  be 
engaged  in  various  related  and  non-related  side  lines  and  businesses. 
In  addition  to  packing  houses,  these  packers  also  had  extensive 
holdings  in  stockyards,   private  refrigerator  cars,  cold  storage 


MAGNITUDE  OF  BUSINESS 


383 


plants,  branch-house  system  of  distribution,  banks  and  real  estate. 

As  parent  companies,  or  through  affiliated  or  subsidiary  companies. 

these  packers  manufactured  or  handled,  among  other  things,  the 

following  products  (arranged  alphabetically): 

acid  phosphate  cocoa  melts 

albumen  cofifee  milk 

alfalfa  meal  cold  cream  molasses 

alundum  cloth  combs  mutton 

ammonia  corpus  luteum  oleomargarine 

apple  butter  cottonseed  oil  oUves 

apricots  cremol  ox  hps 

asparagus  dry  kelp  ox  tongues 

bacon  ducks  pancreatin 

baked  beans  eggs  peaches 

bath  salts  emery  paper  peanuts 

beef  evaporated  milk  pepper 

beets  fertilizers  pepsin 

belting  fish  phosphate  rock 

bladders  flour  pickled  ears 

blood  gallstones  pickled  hocks 

blood  pudding  garlic  pickled  pigs'  feet 

boiled  kidneys  gelatine  pickled  slats 

bone  meal  ginger  pickled  snouts 

boneless  pigs'  feet  glycerine  pickled  tongue 

brains  grape  juice  pickled  tripe 

brawn  gut  strings  pig  tails 

bristle  hair  potash 

buckwheat  ham  poultry 

butter  hides  produce 

calf  heads  and  feet  hog  serum  renin 

calf  hvers  hoofs  rennet 

calf  sweetbreads  horns  rice 

calves'  hearts  jams  salt 

catgut  ligatures  jeUies  sandpaper 

catsup  jowls  soap 

cattle  tail  switches  knife  handles  sohd  ox  tails 

cauls  krout  souse 

cheese  lamb's  tongue  stock  food 

cherries  lard  suet 

chryotolon  cloth  leather  sulphuric  acid 

chymogen  lecithal  suprarenahn 

chymol  loins  thyroid  powder 

coca-cola  lungs  tripe 

wool 

In  developing  these  extensive  by-products,  side  lines,  and 
other  lines  these  five  packers  made  large  use  of  the  industrial 
principle  of  ''integration  of  services"  (that  is,  elimination  of  the 
middleman;  direct  production  and  marketing). 

The  five  companies  had  the  following  capitalization  in  1917: 

Armour  &  Company $150,000,000 

The  Cudahy  Packing  Company 28,747,300 

Morris  &  Company ".        13,900,000 

Swift  &  Company 132,261,000    ' 

Wilson  &  Company 45,476,400 


384  LIVE-STOCK  AND  MEAT  INDUSTRY 

''The  most  satisfactory  single  index  of  the  proportion  of  the  meat 
industry  controlled  by  the  Big  Five,"  says  the  Report,  "is  the  fact 
that  they  kill,  in  round  figures,  70  per  cent  of  the  live  stock  slaugh- 
tered by  all  packers  and  butchers  engaged  in  interstate  commerce." 
No  exact  figures  could  be  given  for  the  per  cent  of  all  slaughtering 
done  by  these  packers,  since  there  are  thousands  of  butchers  who 
kill  for  the  local  village  or  city  trade,  in  addition  to  the  slaughter- 
ing done  on  the  farms  by  hundreds  of  thousands  of  farmers. 

(2)  Combination  Among  Packers. — The  Commission  found 
that  in  the  purchase  of  live  stock,  there  was  a  remarkable  uniformit}^ 
from  year  to  year  in  the  percentages  purchased  by  each  of  the  big 
packers,  and  concluded  that  this  was  circumstantial  evidence  of  a 
combination.  However,  since  the  same  uniformity  exists  among 
the  small  packers  in  the  purchase  of  their  requirements,  and  in 
many  other  industries,  this  evidence  of  combination  is  not  con- 
vincing. No  evidence  was  found  that  there  was  any  ''combina- 
tion" among  the  big  packers  in  fixing  prices  paid  for  live  stock  or 
fixing  prices  received  for  dressed  meats,  or  that  large  profits  were 
made  on  the  volume  of  business  done. 

The  conclusions  reached  by  the  Commission  as  to  the  auto- 
cratic powers  of  the  packers  were  stated  in  these  words: 

"The  great  power  of  the  five  packers  in  the  meat,  by-product,  and  food 
industries,  the  history  of  their  growth,  the  ramifications  of  their  control  and 
influence,  their  interrelations,  and  the  corporate  machinery  through  which 
they  work,  are  matters  that  command  pubhc  attention.  A  fair  consideration 
of  the  course  the  five  packers  have  followed  and  the  position  they  have  already 
reached  must  lead  to  the  conclusion  that  they  threaten  the  freedom  of  the 
market  of  the  country's  food  industries  and  of  the  by-product  industries  linked 
therewith.  They  constitute  a  force  operating  with  increasing  power  in  the 
direction  of  monopoly  of  an  important  part  of  the  country's  necessities.  An 
approaching  packer  domination  of  all  important  foods  in  this  country  .  .  . 
seems  a  certainty  unless  fundamental  action  is  taken  to  prevent  it." 

Remedies. — The  Trade  Commission  considered  various  remedies 
for  the  situation  which  they  found  to  exist,  such  as  government 
ownership  of  the  packing  houses,  private  ownership  and  operation 
under  federal  license,  and  so  on.  The  final  "remedy"  proposed  by 
the  Commission  was  a  simple  one,  containing  these  four  provisions : 

(1)  Government  ownership  of  all  cars  used  in  transporting 
meat  animals. 

(2)  Government  ownership  of  the  stockyards. 

(3)  Government  ownership  of  all  privately  owned  refrigera- 
tor cars. 

(4)  Government  ownership  of  the  branch  houses  of  the  packers, 
and  of  their  cold  storage  plants  and  warehouses. 


THE  REAL  EVIL  AND  THE  REMEDY  385 

The  Reply  of  the  Packers. — ^When  the  above  Repont  of  the 
Federal  Trade  Commission  was  pubUshed,  the  packers  involved 
rephed  that  the  proposed  *' remedy"  would  not  result  in  better 
prices  to  producers,  or  lower  prices  to  consumers,  or  prove  in  any 
way  beneficial  to  the  public.  The  packers  very  vigorously  denied 
that  they  '* dominated"  the  live  stock  market  or  were  able  to  over- 
ride the  forces  of  supply  and  demand.  Fluctuations  in  the  prices 
of  live  stock  and  of  meats  they  attributed  solely  to  the  two  factors 
of  supply  of  live  stock  and  consumers'  demand  for  meat. 

The  Real  Evil  and  the  Remedy. — The  many  investigations  of 
the  packers  have  generally  been  weak  either  in  diagnosis  or  in 
therapeutics,  or  both.  The  mere  bigness  of  the  packers  has  chal- 
lenged attention.  Their  prominent  position — financial,  industrial 
and  otherwise — has  created  a  state  of  mind  among  many  producers 
and  consumers  that  in  these  packers  was  vested  autocratic  indus- 
trial power.  A  popular  feeling  has  been  created  that  these  big 
packers  have  not  merely  great  power,  but  irresponsible  power.  This 
feeling  is  more  than  a  mere  belief,  or  mere  conviction;  it  is  a  state 
of  mind.  This  is  the  diagnosis  of  the  situation.  And  it  suggests 
the  remedy.  The  principle  of  the  cure  is  simple  enough,  namely, 
to  preserve  the  economies  of  the  large-scale  business  system  devel- 
oped by  the  packers  and  at  the  same  time  establish  what  may  be 
termed  a  ''responsible  government"  of  the  packers.  This  latter 
phrase  needs  some  further  elucidation. 

A  quotation  was  given  above  from  the  old  Maryland  Consti- 
tution, to  illustrate  the  instinct  of  our  people  against  autocratic, 
irresponsible  power,  both  political  and  economic.  Our  forefathers 
established,  or  attempted  to  establish,  a  political  government 
which  would  reflect  and  respond  to  the  will  of  the  people  governed. 
The  modern  industrial  clash  between  large  aggregations  of  capital 
(popularly  and  wrongly  called  "Trusts")  and  the  mass  of  the 
people  themselves  is  due  to  this  ancient  instinct  of  abhorrence  of 
irresponsible  power.  The  almost  childUke  faith  in  competition  as 
the  "life  of  trade"  reflects  this  same  instinct.  Hence  came  our 
Sherman  Anti-Trust  law,  saying,  in  substance,  "Thou  shalt  com- 
pete." And  yet  some  of  the  most  progressive  nations  have  found 
it  wise  to  pass  laws,  as  concerns  certain  fields  of  commerce,  saying, 
in  substance,  "Thou  shalt  not  compete."  ^ 

^  The  paradox  of  the  Sherman  law  is  apparent.  It  says,  thou  shalt  compete. 
In  competition  (which  is  industrial  warfare)  the  strong  survive,  the  weak 
perish.  By  oJDeying  this  law  too  well,  the  powerful  finally  ehminate  the  weak, 
and  competition  ceases.  Not  to  compete  is,  under  the  Sherman  law,  a  crime. 
To  compete  too  well  is  hkewise  a  crime. 
25 


386  LIVE-STOCK  AND  MEAT  INDUSTRY 

Responsible  Government  for  the  Packers. — ^The  principle  of 
''responsible  government"  is  as  sound  in  economics  as  it  is  in 
politics.  The  small-scale  business  maintains  the  personal  contact 
of  owner  and  public  to  such  a  degree  that  the  question  never 
arises  as  to  its  ''responsibihty."  The  question  to  be  solved  is, 
how  give  those  concerned  in  the  meat  business,  as  producers  of 
live  stock  or  consumers  of  meat,  a  ''voice"  in  this  business?  For 
there  must  be  a  voice  representing  these  interests  if  the  business 
is  to  be  in  fact  responsible.  The  simplest  and  most  logical  solution 
would  be  to  let  the  producers'  organizations  and  the  organized 
consumers  send  duly  elected  representatives  to  meet  in  a  confer- 
ence or  "parliament"  with  representatives  of  the  packers.  The 
consumers  are  not  organized,  as  yet,  to  any  extent,  and  such  a 
proposal  would  have  only  a  theoretical  interest  for  them,  for  the 
immediate  present.  Producers  of  live  stock  are  already  fairly  well 
organized  in  specialized  associations.  However,  the  live  stock 
associations  would  do  well  to  ally  themselves,  for  such  a  conference 
as  outlined,  with  the  strongest  farmers'  organization  in  America, 
namely,  the  American  Federation  of  Farm  Bureaus.  Or  at  any 
rate,  a  section  of  the  American  Federation,  representing  the 
packing  house  territory,  would  be  very  much  interested  in 
such  a  fundamental  question  as  the  issues  between  packers  and 
live  stock  growers. 

Such  a  conference  would  be  in  the  nature  of  a  collective  bargain 
parliament.  The  producers  would  have  to  accept  the  economic 
law  of  supply  and  demand  as  fundamental  in  governing  prices 
of  live  stock,  rather  than  the  cost-of-production  theory.^  The 
producers'  ancient  grievance  is  price  fluctuations  from  day  to  day. 
Doubtless  a  collective  bargain  could  be  made,  stabilizing  live  stock 
prices  over  certain  periods,  such  as  is  now  done  in  the  milk  busi- 
ness with  monthly  jpilk  prices.  Only  it  would  likely  be  impossible 
to  stabilize  live  stock  prices  over  periods  exceeding  one  week  in 
length.  At  any  rate,  the  producer  would  feel  that  in  such  a  confer- 
ence he  had  a  voice,  and  that  he  had  a  part  in  the  directing,  under 
economic  laws,  of  the  production  and  marketing  of  live  stock.  He 
would  feel  his  own  strength,  his  own  power.  He  would  perceive 
then,  for  the  first  time,  that  the  packers'  power,  like  his  own,  was 
not  autocratic — except  temporarily  and  locally  and  within  very 
narrow  limits.  His  instinct  for  "representative  government" 
would  be  satisfied.  Of  course  representative  government  does 
not  make  all  men  happy  or  cure  all  ills  or  level  all  inequalities  or 

^  See  Appendix  to  chapter  XV  for  further  discussion  of  this  point. 


MISCELLANEOUS  PROBLEMS  387 

destroy  the  power  of  the  strong  leader,  but  it  does  satisfy  that 
inexorable  and  eternal  demand  for  a  responsible  government. 
The  cherished  belief  in  the  "consent  of  the  governed"  must 
be  honored. 

A  "solution"  of  the  packing  house  problem  that  would  substi- 
tute a  bureaucratic  government  ownership  for  the  initiative  and 
enterprise  of  private  ownership  would  be  too  costly  a  remedy  to 
deserve  serious  consideration.  It  would  inevitably  result  in  poorer 
service  at  greater  cost.  The  solution  proposed  above,  however, 
would  go  far  towards  preserving  all  the  good  in  the  present  system 
and  eliminating  its  evils.  Government  control  by  licensing,  by 
commissions  or  other  administrative  bodies  would  likely  prove  in 
the  future,  as  it  has  in  the  past,  wherever  tried,  too  narrowly 
bureaucratic  or  too  political.  Such  a  "remedy"  would  be  worse 
than  the  disease. 

"  Dissolution  "  of  the  Big  Five  Packers. — Under  pressure  of 
public  opinion,  the  large  packers  began  negotiations  with  the 
Federal  Department  of  Justice,  which  led,  in  December,  1919,  to  a 
compromise  solution,  for  the  time,  of  the  major  points  in  dispute. 
A  voluntary  agreement  was  reached,  the  same  to  be  made  the 
subject  of  a  "consent  decree,"  which  had  for  its  main  purpose 
the  divorce  of  the  packers  from  many  side  lines  and  subsidiary 
businesses.  Under  this  agreement  the  packers  were  allowed  two 
years  to  sell  their  stockyard  holdings,  their  market  newspaper 
interests,  their  cold-storage  warehouses  not  used  in  the  meat  busi- 
ness, to  quit  the  retail  meat  business,  to  drop  various  side  lines, 
including  groceries,  fish,  vegetables,  fruits,  molasses,  honey,  jams, 
jellies,  preserves,  ices,  sauces,  relishes,  coffee,  tea,  chocolate,  cocoa, 
milk,  flour,  sugar,  rice,  bread,  crackers,  biscuits,  spaghetti,  vermi- 
celli, macaroni,  cigars,  china,  furniture,  etc.  They  were  allowed 
two  years  to  dispose  of  all  branch  liouses,  route  cars,  and  automo- 
bile trucks  not  used  in  their  own  nieat  and  dairy  products  business. 
Eggs,  butter,  poultry  and  cheese  remain  as  side  lines.  The  Attor- 
ney General  of  the  United  States  announced  this  voluntary  agree- 
ment to  be  a  "victory"  for  the  government,  since,  under  it,  "the 
price  of  meat  is  within  the  control  of  the  people  themselves."  The 
public  has  already  seen  more  than  one  "trust  "dissolved  by  the 
government,  and  hence  will  wait  for  time  to  show  whether  this 
"dissolution"  will  lower  the  cost  or  improve  the  quality  of  meat 
on  the  consumer's  table. 

Miscellaneous  Problems. — (1)  Cooperative  Packing  Houses. 
Cooperative  meat  packing  houses  have  been  tried  in  the  Middle 


388  LIVE-STOCK  AND  MEAT  INDUSTRY 

West,  particularly  Wisconsin,  Iowa,  Minnesota,  and  North  Dakota. 
The  record  of  these  attempts  is  not  an  encouraging  one.  The 
death-rate  has  been  very  high  among  them.  Apparently  they  are 
too  small  to  conduct  a  large-scale  business — which  meat  packing  is, 
par  excellence;  they  can  buy  live  stock  and  kill  it  and  prepare  good 
meat ;  they  are  weak  in  marketing  their  product,  because  they  can 
not  furnish  at  any  and  all  times  the  quality  and  the  quantity  of 
meat  the  buyer  wants.  This  is  because  their  supply  of  live  stock 
is  not  constant  and  regular  in  quantity,  quality,  or  time. 

(2)  Mtinicipal  Abattoirs. — Largely  as  a  sanitary  measure, 
American  cities  are  beginning  to  erect  and  operate  municipal 
abattoirs,  and  as  experience  accumulates,  and  as  public  health 
becomes  more  the  concern  of  every  taxpayer,  there  is  certain  to 
come  an  increase  in  the  number  of  these  slaughter  houses.  The 
unspeakable  filth  which  surrounds  many  (probably  most)  small 
butchers'  private  slaughter  houses,  near  the  villages  and  cities, 
is  certainly  a  condition  to  challenge  the  attention  of  public  health 
officers.  In  time  the  municipal  abattoir  will  doubtless  be  a  very 
important  economic  factor  in  the  fresh  meat  business.  The  posi- 
tion of  the  large  packers  in  the  cured  meats,  however,  seems  to  be 
safe  from  any  local  competition  of  this  kind. 

QUESTIONS  ON  THE  TEXT 

1.  How  does  the  packing  industry  rank  in  importance  among  American 

industries? 

2.  Show  that  this  industry  is  of  more  than  national  importance. 

3.  Describe  the  course  of  Hve  stock  production  in  the  United  States.    Signifi- 

cance of  movement. 

4.  What  economic  and  legal  questions  are  involved  in  the  study  of  meat 

packing?  , 

5.  Discuss  the  live  stock  situation  under  these  topics:    meat  as  food;  geo- 

graphical shift;  change  in  number  of  Uve  stock;  future  outlook  for  an 
increase  and  for  a  decrease;  summarize. 

6.  State  outlook  for  foreign  competition. 

7.  Discuss  the  meat  packing  industry  of  the  United  States  under  following 

topics:  large-scale  business;  division  of  labor;  by-products;  distribution; 
inspection. 

8.  Show  American  attitude  toward  monopoly,  pohtical  or  economic. 

9.  Give  the  findings  of  the  Garfield  Report. 

10.  Quote  the  President's  letter  of  1917  directing  an  investigation  by  the 

Federal  Trade  Commission. 

11.  Give  findings  of  the  Federal  Trade  Commission. 

12.  What  remedies  did  the  Trade  Commission  propose? 

13.  Give  reply  of  the  packers. 

14.  What  is  the  real  evil?    The  fitting  remedy? 

15.  Discuss   advisability   of  government  ownership   of   the   meat  packing 

industry. 

16.  Give  status  of  cooperative  packing  house  movement. 

17.  Give  situation  as  regards  municipal  abattoirs. 


REFERENCES  389 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Debate:  Resolved,  that  we  should  adopt  the  pohcy  of  government  owner- 

ship and  operation  of  the  packing  houses. 

2.  Give  an  account  of  the  cooperative  packing  houses  at  La  Crosse,  Wiscon- 

sin; Madison,  Wisconsin;  Fairbault,  Minnesota;  Fargo,  North  Dakota. 

3.  What  is  the  social  value  of  competition  in  large-scale  industries? 

4.  Should  the  large  packing  houses  be  ordered  to  compete  or  to  cooperate? 

5.  What  method  or  system  would  best  render  the  power  of  the  Packers 

"responsible"? 

REFERENCES 

1.  "The  Beef  Industry."  Report  of  the  Commissioner  of  Corporations, 
March  3,  1905.    Washington,  1905. 

2.  "Report  of  the  Federal  Trade  Commission  on  the  Meat  Packing 
Industry."  Two  Parts.  Washington,  1918  and  1919.  Summary  and  Part  I, 
1919;  Part  II,  Evidence  of  Combination  Among  Packers,  1918. 

3.  Meat  Situation  in  the  United  States.    Five  Parts: 

I.  "Statistics  of  Live  Stock,  Meat  Production  and  Consumption,  Prices 
and  International  Trade  for  Many  Countries."  By  George  K.  Holmes. 
(Report  109.) 

II.  "Live  Stock  Production  in  the  Eleven  Far  Western  Range  States." 
By  Will  C.  Barnes,  and  J.\mes  T.  Jardine.    (Report  110.) 

III.  "Methods  and  Costs  of  Growing  Beef  Cattle  in  the  Com  Belt  States." 
By  J.  S.  Cotton,  Morton  O.  Cooper,  W.  F.  Ward,  and  S.  H.  Ray.  (Re- 
port 111.) 

IV.  "Utilization  and  Efficiency  of  Available  American  Feed  Stuffs."  By 
W.  F.  Ward  and  S.  H.  Ray.    (Report  112.) 

V.  "  Methods  and  Costs  of  Marketing  Live  Stock  and  Meats."  By  Louis 
D.  Hall,  F.  M.  Simpsqn  and  S.  W.  Doty.  (Report  113.)  Office  of  the  Secre- 
tary, Department  of  Agriculture,  Washington,  1916. 

4.  "Proceedings  of  the  Conference  Relative  to  the  Marketing  of  Live 
Stock:  Distribution  of  Meats  and  Related  Matters."  Held  by  the  Direction 
of  David  Franklin  Houston,  Secretary  of  Agriculture.  Conducted  by  the 
Office  of  Markets  and  Rural  Organization,  Charles  J.  Brand,  Chief.  Held  at 
Chicago,  November  15-16,  1915.    64  Cong.,  1  Sess.  House  Doe.  No.  855. 

5.  "Report  of  the  United  States  Industrial  Commission."  19  volumes. 
Vol.  6,  pp.  225-267.    Washington,  1898-1902. 

6.  "Swift  and  Company's  Analysis  and  Criticism  of  Part  II  of  the  Report 
of  the  Federal  Trade  Commission  on  the  Meat  Packing  Industry  of  November 
25,  1918."    Swift  and  Company,  Chicago,  April  5,  1919. 

7.  "Testimony  of  J.  Ogden  Armour  on  Behalf  of  Armour  and  Company, 
January  21,  1919,  Before  the  Committee  on  Interstate  and  Foreign  Commerce 
in  the  Matter  of  the  Investigation  of  the  Packing  Industrv."  H.  R.  13324. 
Washington,  1919. 

8.  de  Ricqles,  a.  E.  :  "Statement  Prepared  by,  on  Live  Stock  Marketing 
Questions  for  the  Use  of  Dwight  B.  Heard,  President  of  the  American  National 
Live  Stock  Association,  and  the  Market  Committee  of  the  American  National 
Live  Stock  Association,  and  the  Federal  Trade  Commission,"  n.d. 

9.  :    "Address  on  Live  Stock  Marketing,  Before  the  Third  Annual 

Conference  on  Marketing  and  Farm  Credits,"  Chicago,  1916. 

10.  Weld,  L.  D.  H.:  "A  Big  Vital  American  Industry.  The  Story  of 
Swift  &  Company.'?  The  Bankers*  Magazine,  January,  1919.  Vol.  XCVIII. 
New  York,  1919. 

11.  :    "From  Live  Cattle  to  Beef."    Cornell  Countryman,  April, 

1919,  Ithaca,  New  York. 

12.  Armour,  J.  Ogden:  "The  Packers,  the  Private  Car  Lines  and  the 
People."    Philadelphia,  1906. 


390  LIVE-STOCK  AND  MEAT  INDUSTRY 

13.  Scientific  American,  November  7,  1857.  Article  on  the  First  Refrig- 
erator Car. 

14.  Leffingwell,  Albert:    "American  Meat"  (on  order). 

15.  Andes,  Louis  E.:    "Animal  Fats  and  Oils." 

16.  Wilder,  F.  W.:   "Wilder's  Modern  Packing  House." 

17.  "Douglas's  Encyclopedia  of  the  Meat  Packing  Industry." 

18.  NiMMo,  Joseph:  "Report  in  Regard  to  the  Range  and  Ranch  Cattle 
Business  of  the  United  States."  Annual  report  on  the  internal  commerce  of 
the  U.  S.,  1885,  pp.  95-294,  with  five  maps.  U.  S.  Treasury  Department, 
Bureau  of  Statistics.  Reprinted  without  the  maps.  House  Exec.  Document, 
No.  267,  48  Cong.  2  Session. 

19.  "Testimony  taken  by  the  Select  Committee  of  the  United  States 
Senate  on  the  Transportation  and  Sale  of  Meat  Products."    Washington,  1889. 

20.  "The  Sheep  and  Wool  Industry  in  the  United  States."  Special  Bulle- 
tin, Chamber  of  Commerce  of  the  United  States,  Washington,  April  26,  1918. 

APPENDIX 

Stabilizing  Supplies  and  Prices. — A  report  of  the  Conference  held  in 
Chicago,  March  10th  and  11th,  1919,  between  representatives  of  the  Kansas 
Live  Stock  Association,  The  Corn  Belt  Meat  Producers  Association,  Missouri 
Live  Stock  Breeders  Association,  Illinois  Live  Stock  Association,  Illinois  Agri- 
cultural Association,  The  Buyers  and  Sellers  Association  of  Texas,  and  repre- 
sentatives of  seventeen  packing  companies. 

Proposed  Agreement  for  the  "Conference  Committee"  of  the  Live  Stock  Industry. — 
At  a  conference  held  in  Chicago  on  March  10  and  11,  1919,  the  representatives  of  the  Kansas 
Live  Stock  Association,  Corn  Belt  Meat  Producers'  Association,  Missouri  Live  Stock  Associ- 
ation, Illinois  Live  Stock  Association,  and  The  Buyers'  and  Sellers'  Association  of  Texas  met 
with  the  five  large  packers  and  eleven  other  packers. 

It  is  the  sense  of  those  participating  in  the  conference  that  it  would  be  to  the  mutual 
benefit  of  the  live-stock  industry,  the  packers,  and  the  consumer,  that  steps  should  be  taken 
to  bring  about  a  closer  cooperation  between  the  various  interests  concerned. 

Realizing  that  the  live-stock  industry  is  on  the  threshold  of  an  era  of  reconstruction, 
and  with  the  prospect  of  removal  of  such  control  as  has  been  exercised  by  the  Food  Admin- 
istration during  the  war  period,  we  are  impressed  with  the  importance  of  reaching  a  better 
understanding  of  the  problems  affecting  the  whole  industry,  and  of  effecting,  if  possible, 
more  economic  methods  of  production  and  distribution  to  the  end  that  our  businesses  may 
be  placed  on  a  sounder  basis,  and  in  order  that  the  finished  product  be  furnished  the  con- 
sumer at  a  minimum  price  compatible  with  cost  of  production. 

It  is  suggested  that  these  ends  may  be  obtained  through  the  formation  of  a  central 
committee  composed  of  producers  and  representatives  of  the  packing  industry,  the  Bureau 
of  Markets,  and  the  National  Live  Stock  Exchange,  which  should  meet  in  Chicago  once  a 
month,  or  oftener,  if  necessary,  for  the  purpose  of  taking  such  measures  as  may  tend  toward 
the  stabilization  of  live  stock  receipts  at  various  markets,  and  for  the  further  purpose  of 
studying  one  another's  problems,  of  adjusting  grievances,  and  of  inaugurating  such  systems 
as  will  be  helpful  to  the  producer,  the  packer,  and  the  consumer.  The  greatest  possible 
publicity  should  be  given  to  all  of  the  proceedings.  It  is  understood  that  if  this  proposal 
becomes  effective  it  shall  not  be  construed  as  in  any  way  restraining  the  activities  of  the 
parties  hereto  in  working  for  or  against  the  passage  of  pending  or  future  federal  legislation 
for  the  regulation  of  the  packing  and  allied  industries.  Its  purpose  is  wholly  constructivei 
looking  to  a  better  understanding  and  fuller  cooperation  between  all  interests  involved. 

It  is  obviously  to  the  best  interests  of  all  concerned  that  receipts  of  live  stock  at  all 
markets  should  be  stabilized  and  distributed  as  evenly  as  possible  in  order  that  a  five-day 
market  may  be  established  for  all  classes  of  live  stock,  and  to  this  end  it  shall  be  distinctly 
the  function  of  the  committee  to  make  effective  such  measures  as  may  be  possible  for  the 
accomplishment  of  this  object. 

It  is  contemplated  that  the  producer  shall  obtain  and  furnish  the  committee  all  import- 
ant information  concerning  the  supply  of  meat  animals  in  the  various  sections  of  the  country. 
Shall  advise  the  committee  regarding  feed  conditions,  and  the  amount  of  live  stock  which 
shall  be  ready  for  market  during  the  various  seasons,  and  in  other  ways  be  a  source  from 
which  valuable  information,  including  cost  of  production,  may  he-  placed  at  the  disposal 
of  the  committee. 

It  is  contemplated  that  the  packers  shall  prepare  and  submit  to  the  committee  informa- 
tion relative  to  the  amount  of  finished  product  on  hand,  the  foreign  and  home  demands  for 
meat  products,  together  with  the  cost  of  live  animals  and  the  expense  of  slaughter,  packing, 
and  distribution  of  the  finished  products.  The  packers  shall  recommend  any  plans  which 
tend  to  reduce  their  expense  of  operation,  such  as  the  equalization  of  receipts,  etc. 


APPENDIX  391 

It  is  contemplated  that  the  committee  shall  carefully  investigate  the  annual  earnings 
of  the  packing  industry,  including  all  the  subsidiary  companies;  it  shall  be  the  privilege  of 
the  committee  to  employ  a  committee  of  public  accountants  of  recognized  standing  to  audit 
the  yearly  statements  of  the  packers.  Any  statements  or  figures  furnished  to  the  committee 
by  the  packers,  or  by  the  producers,  from  time  to  time,  may  also  be  subject  to  verification 
by  public  accountants.  Whenever  duplication  and  unnecessary  overhead  expense  are  dis- 
closed, it  shall  be  the  duty  of  the  committee  to  recommend  the  elimination  of  the  same. 

It  is  contemplated  that  whenever  certain  methods  and  systems  used  by  the  producers 
may  be  shown  to  be  wasteful  or  detrimental  to  the  industry,  it  shall  be  the  duty  of  the  com- 
mittee to  recommend  the  elimination  of  the  same. 

It  is  contemplated  that  in  regulating  the  receipts  of  livestock  during  abnormal  times 
it  will  be  essential  that  the  committee  shall  have  the  support  of  the  Railroad  Administration 
or  the  Interstate  Commerce  Commission  to  the  end  that  the  regulation  of  transportation 
as  recommended  by  this  committee  may  control  the  receipts  at  market  centers. 

We  feel  that  the  membership  of  this  central  committee  should  be  composed  of  the 
following  representatives:  One  from  the  Bureau  of  Markets  of  the  United  States  Department 
of  Agriculture;  two  from  the  National  Livestock  Exchange,  ten  packers,  and  ten  producers, 
representing  the  cattle,  hog,  and  sheep  industries,  with  alternates — a  total  of  twenty-three. 
This  central  committee  shall  have  authority  to  add  one  representative  of  the  stockyards 
and  one  of  the  railroads,  if  it  sees  fit. 

It  is  understood  that  the  producers  here  present  will  take  steps  as  soon  as  possible  to 
notify  all  livestock  producing  organizations  of  the  action  here  taken,  and  to  call  a  general 
meeting  of  three  delegates  from  each  state,  to  be  selected  by  the  State  Associations,  and  three 
delegates  at  large  from  each  of  the  National  Livestock  Associations  and  the  Southern  Live- 
stock Association,  and  it  shall  be  the  province  of  this  meeting  to  select  the  ten  producer 
representatives  that  are  to  serve  on  the  central  committee. 

It  is  contemplated  that  the  producers  will  exercise  the  utmost  care  and  diligence  in 
selecting  their  representatives,  who  will  be  men  of  unquestioned  standing  and  ability,  and 
that  the  packers  shall  name  as  their  representatives  the  principals  of  the  institutions 
represented. 

It  is  understood  that  this  committee,  when  appointed,  shall  formulate  the  rules  and 
regulations  governing  its  operation,  and  that  a  producer  shall  be  selected  as  its  chairman. 
The  headquarters  of  the  committee  we  feel  should  be  in  Chicago. 

The  permanent  committee  shall  create  the  sub-committees  at  various  markets  and  shall 
formulate  the  rules  and  regulations  governing  their  operations.  The  purpose  of  these  local 
committees  is  the  immediate  adjustment  of  any  grievances,  such  as  dilatory  handUng  of 
excessive  variations  in  the  purchase  price  paid  for  the  same  grade  of  live  stock  on  the  same  day. 

We  suggest  that  the  financing  of  this  organization  be  divided  equally  between  the  pack- 
ing industry  and  the  live  stock  associations,  and  that  the  methods  of  raising  the  necessary 
funds  be  left  to  the  central  committee. 

Parties  Who  Participated  in  the  Conference  Were: 

Geo.  T.  Donaldson,  President  Kansas  Live  Stock  Association,  Greensburg,  Kan. 

J.  H.  Mercer,  Secretary  Kansas  Live  Stock  Association,  Topeka,  Kan. 

Pet  Nation,  Kansas  Live  Stock  Association,  Hutchinson,  Kan. 

John  Edwards,  Kansas  Live  Stock  Association,  Eureka,  Kan. 

Dan  Casement,  Kansas  Live  Stock  Association,  Manhattan,  Kan. 

Arnold  Berns,  Kansas  Live  Stock  Association,  Peabody,  Kan. 

C.  L.  Daughters,  Kansas  Live  Stock  Association,  Manhattan,  Kan. 

J.  G.  Imboden,  President  Illinois  Live  Stock  Association,  Decatur,  Illinois. 

Carl  Marshall,  Illinois  Live  Stock  Association,  Ipava,  Illinois. 

E.  F.  Keefer,  Illinois  Live  Stock  Association,  Chicago,  Illinois. 

C.  D.  Yancey,  President  Missouri  Live  Stock  Association,  Liberty,  Mo. 

S.  P.  Houston,  Vice-President  Missouri  Live  Stock  Association,  Malta  Bend,  Mo. 
S.  T.  Simpson,  Secretary  Missouri  Live  Stock  Association,  Columbia,  Mo. 
A.  W.  Nelson,  Missouri  Live  Stock  Association,  Bunceton,  Mo. 
A.  Sykes,  President  Corn  Belt  Meat  Producers'  Association,  Ida  Grove,  Iowa. 
Henry  C.  Wallace,  Secretary  Corn  Belt  Meat  Producers'  Association,  Des  Moines. 
E.  L.  Burke,  Omaha,  Nebraska. 

T.  F.  Moody,  Buyers'  and  Sellers'  Association  of  Texas,  Canadian,  Texas. 
Peter  Fleming,  Prairie  Farmer,  Chicago. 
Thos.  E.  Wilson,  Wilson  &  Company,  Chicago. 
V.  D.  Skipworth,  Wilson  &  Company,  Chicago. 
R.  F.  Eagle,  Wilson  &  Company,  Chicago. 
.,  Arthur  Meeker,  Armour  &  Company,  Chicago. 
J.  Ogden  Armour,  Armour  &  Company,  Chicago. 
R.  D.  McManus,  Armour  &  Company,  Chicago. 
Edward  F.  Swift,  Swift  &  Company,  Chicago. 
G.  F.  Swift,  Swift  &  Company,  Chicago. 
T.  H.  Ingwersen,  Swift  &  Company,  Chicago. 
W.  B.  Traynor,  Swift  &  Company,  Chicago. 
L.  D.  H.  Weld,  Swift  &  Company,  Chicago. 
Edward  Morris,  Morris  &  Company,  Chicago. 

D.  R.  Buckham,  Morris  &  Company,  Chicago. 

E.  A.  Cudahy,  Cudahy  &  Company,  Chicago. 


392  LIVE-STOCK  AND  MEAT  INDUSTRY 

Parties  Who  Participated  in  the  Conference  Were — (Continued)  : 

J.  G.  Connie,  Dold  Packing  Company,  Buffalo. 

E.  C.  Merritt,  Indianapolis  Packing  Company,  Indianapolis. 
J.  R.  Kingan,  Kingan  Packing  Company,  Indianapolis. 
James  Craig,  Parker  Webb,  Detroit. 

L.  D.  Nash,  Cleveland  Provisions  Company,  Cleveland. 

F.  J.  Sullivan,  Sullivan  -Packing  Company,  Detroit. 

A.  I.  Eberhardt,  Hornell  Packing  Company,  Austin,  Texas. 
W.  R.  Miller,  Miller  &  Hart,  Chicago. 

G.  Bishoff,  Independent  Packing  Company,  St.  Louis. 

Chas.  I.  Hammond,  Hammond-Standish  Packing  Company,  Detroit. 

C.  H.  Nuckles,  Nuckles  Packing  Company,  Pueblo,  Colorado. 

W.  G.  Eckart,  Pueblo,  Colorado. 

Harold  Swift,  Swift  &  Company,  Chicago. 

Stabilizing  Supplies  and  Prices.  (A  Producers'  Committee  of  Fifteen,  Chosen  at  Kansas 
City,  April  12,  1919.)— "It  is  the  sense  of  those  participating  in  the  conference  that  it 
would  be  to  the  mutual  benefit  of  the  live-stock  industry,  the  packers  and  the  con- 
sumers, that  steps  should  be  taken  to  bring  about  a  closer  cooperation  between  the  various 
interests  concerned. 

"Realizing  that  the  live-stock  industry  is  on  the  threshold  of  an  era  of  reconstruction, 
and  with  the  prospect  of  removal  of  such  control  as  has  been  exercised  by  the  Food  Admin- 
istration during  the  war  period,  we  are  impressed  with  the  importance  of  reaching  a  better 
understanding  of  the  problems  affecting  the  whole  industry,  and  of  effecting,  if  possible, 
more  economic  methods  of  production  and  distribution,  to  the  end  that  our  businesses 
may  be  placed  on  a  sounder  basis,  and  in  order  that  the  finished  product  be  furnished  the 
consumer  at  a  minimum  price  compatible  with  cost  of  production. 

"  It  is  recommended  that  these  ends  may  be  promoted  through  the  formation  of  a  com- 
mittee of  live-stock  producers  which  shall  meet  from  time  to  time  as  may  be  found  necessary, 
and  counsel  with  similar  committees  representing  the  packers  and  other  interests.  Said 
producers'  committee  shall  be  selected  at  a  national  meeting  composed  of  delegates  from  the 
several  states  (said  delegates  to  be  selected  at  state  meetings  attended  by  representatives 
of  the  various  producers'  organizations),  and  the  members  to  represent  the  range  cattle 
industry,  the  cattle-feeding  industry,  the  hog  industry  and  the  sheep  industry,  the  propor- 
tion of  representation  and  the  number  constituting  the  committee  to  be  decided  by  the 
national  convention.  Said  convention  shall  be  planned  and  called  by  the  committee  of 
fifteen  which  it  is  now  proposed  to  create. 

"Pending  said  national  convention  and  the  appointment  of  said  committee,  a  live-stock 
producers'  committee  shall  now  be  formed  as  follows: 

"  The  committee  ^hall  consist  of  fifteen  members,  of  whom  four  shall  represent  the  range 
interests,  eight  the  feeding  states,  two  the  hog  industry  and  one  the  sheep  industry.  Those 
representing  the  range  interests  shall  be  selected,  two  by  the  American  National  Live  Stock 
Association,  one  by  the  Cattle  Raisers'  Association  of  Texas,  and  one  by  the  Southern  Cattle- 
men's Association.  Those  representing  the  feeding  interests  shall  be  selected  one  each  by  the 
associations  of  the  states  of  Kansas,  Missouri,  Illinois,  Iowa,  Nebraska  and  Indiana,  and  two 
by  the  associations  of  the  states  in  territory  east  of  Indiana.  The  two  representatives  of  the 
hog  industry  shall  be  named  by  joint  action  of  the  various  national  swine  associations,  and 
the  one  representing  the  sheep  industry  shall  be  named  by  the  National  Wool  Growers' 
Association.  The  committee  thus  created  shall  have  full  authority  to  meet  with  the  com- 
mittees representing  the  packers  and  other  interests  and  to  do  whatever  may  seem  to  it 
to  be  necessary  to  promote  the  interests  of  the  producers,  by  taking  such  measures  as  may 
tend  toward  the  stabilization  of  the  live-stock  industry  and  for  the  further  purpose  of  study- 
ing one  another's  problems,  of  adjusting  grievances,  and  of  inaugurating  such  systems  as 
will  be  helpful  to  the  producer,  the  packer  and  the  consumer.  The  various  associations  are 
requested  before  May  10th  to  select  their  representatives  on  this  committee  of  fifteen,  and 
the  committee  shall  meet  at  Chicago  on  May  15th,  at  which  time  it  shall  organize,  elect 
its  own  chairman  and  secretary,  and  provide  for  such  sub-committees  as  it  may  deem  neces- 
sary to  carry  out  the  purposes  for  which  it  is  created. 

"To  effect  the  proposed  organization,  a  committee  of  six,  in  addition  to  himself  as 
chairman,  shall  be  chosen  at  this  time  by  the  chairman  of  this  meeting,  to  put  this  plan 
into  effect  without  delay,  to  notify  the  various  state  producers'  associations,  and  to  invite 
the  packers  and  other  interests  to  cooperate  with  the  producers'  committee  thus  created 
in  promoting  the  meat  industry  of  the  nation." 

Note. — The  Producers'  Committee  of  Fifteen  failed  to  function,  and  the  committee 
was  dissolved  in  November,  1919.  Its  work  was  turned  over  to  the  American  Federation 
of  Farm  Bureaus.  The  action  of  the  committee  in  dissolving  itself  did  not  have  the  universal 
approval  of  the  stockmen  whom  it  was  supposed  to  represent. 


CHAPTER  XXIV 

TAXATION  PROBLEMS:     SINGLE  TAX;  PROTECTIVE 

TARIFF 

I.    SINGLE   TAX 

The  writings  of  Henry  George  have  popularized  the  single  tax  in 
our  own  land  and  in  many  other  lands.  The  fervor  of  his  eloquence, 
the  beauty  and  grace  of  his  literary  style,  and  the  pure  sincerity  of 
his  motives  have  given  his  work  a  strong  appeal.  He  has  succeeded, 
as  few  writers  have,  in  yoking  together  economics  and  ethics. 

Definition. — ^A  single  tax  means  a  tax  on  land  value.  By  land 
value  is  meant  the  rental  value  of  the  land,  what  it  is  worth  annu- 
ally for  use,  its  economic  rent.  The  word  land,  as  used  by  the 
single  taxers,  includes  minerals,  water,  oils,  and  every  other  thing 
of  value  created  by  nature  and  forming  a  part  of  the  earth;  and, 
conversely,  the  word  land  excludes  all  buildings,  structures,  and 
creations  of  man  upon  or  in  the  land.  To  illustrate.  If  the  single 
tax  were  applied  as  a  substitute  for  all  other  forms  of  taxes,  as  its 
name  implies  it  should  be,  there  would  cease  to  be  any  tax  on 
incomes,  or  inheritances,  on  personal  property,  on  imports,  on 
business,  on  consmnption,  and  so  on.  In  the  city,  all  buildings 
and  their  contents  would  b6  exempt  from  taxation — the  land  value 
alone  being  taxed.  In  the  country,  there  would  be  no  tax  on  houses, 
barns,  other  buildings,  live  stock,  tools,  grain,  or  any  kind  of  per- 
sonal property — the  land  value  alone  being  taxed. 

Incidence  of  the  Tax. — The  tax  burden  would  be  the  same  total 
amount,  whether  the  money  were  secured  from  the  single  tax  as 
advocated  or  from  the  multiple  taxes  now  in  use.  But  it  would 
fall  on  different  persons — on  the  owners  of  land  values.  The 
farmer,  thinking  of  the  millions  of  acres  of  farm  lands  as  against  the 
relatively  few  acres  of  city  land,  wonders  whether  the  single  tax 
would  not  shift  the  tax  burden  in  large  part  from  the  city  to  the 
country.  Obviously  not.  For  the  bulk  of  the  land  value  is  in  the 
cities.  Thus  the  land  values  in  New  York  City  alone  are  worth 
more  than  the  total  farm  land  values  of  one-half  the  States  in  the 
Union.  The  tax  burden,  therefore,  under  the  single  tax,  would 
somewhat  raise  taxes  in  cities  and  lower  taxes  on  farms,  should 
the  single  tax  be  applied  at  once  over  the  whole  nation.  However, 
if  the  single  tax  were  applied  in  a  State  having  no- great  metro- 

393 


394  TAXATION  PROBLEMS 

politan  districts,  there  would  be  little  change  in  the  burden  as 
between  city  and  country. 

Argument  for  the  Single  Tax.— For  a  person  who  is  not  a  single 
taxer  to  state  the  arguments  for  the  single  tax  fairly  is  not  an  easy 
task.  However,  the  effort  will  be  made  here.  Condensed  within 
very  narrow  limits  the  argument  runs  substantially  as  follows: 

The  private  appropriation  of  ground  rent  is  a  privilege — in  fact 
it  is  our  worst  form  of  special  privilege  to-day.  No  man  created 
the  earth  or  gave  it  value.  The  Almighty  created  the  land,  and 
society  gives  it  value.  Man  cannot  create  new  land.  The  supply 
is  strictl}^  limited.  The  use  of  the  land  is  absolutely  necessary  for 
the  existence  of  man.  Society  does  not  permit  any  one  to  mark 
off  a  certain  area  of  the  ocean,  for  instance,  and  require  all  users 
thereof  to  pay  a  toll  for  it.  Were  this  permitted,  especially  useful 
parts  of  it,  such  as  the  entrances  to  harbors,  would  have  a  barrier 
thrown  across  them  and  their  use  permitted  by  the  ''owners"  only 
to  those  who  would  pay  a  rent  for  them.  The  sea  belongs  to  those 
who  use  it.  Neither  does  society  now  permit  private  individuals 
to  appropriate  the  use  of  socialized  strips  of  land,  such  as  streets 
and  highways,  and  exact  toll  (rent)  from  the  users  thereof.  So  an 
individual  who  uses  the  land,  like  an  individual  who  ventures  to 
sea  in  his  fishing  schooner,  is  entitled  to  a  wage  on  his  labor  and  to 
interest  on  his  capital,  but  not  to  a  rent  on  the  land  which  he  did 
nothing  to  create.  The  rent  of  the  land — the  economic  rent  (the 
market  value  of  its  use) — is  due  to  society,  and  hence  should  be 
appropriated  by  society.  Society  should  collect  this  economic 
rent  and  call  it  a  tax.  For  the  individual  to  collect  wages  and 
interest  is  wise  and  just;  for  him  to  collect  economic  rent  is  a  special 
privilege  and  is  uneconomic  and  unjust.  In  other  words,  if  he 
farms  the  land  and  receives  a  fair  wage  for  his  labor  and  a  fair 
interest  return  on  every  cent  he  has  invested  in  machinery,  im- 
provements, drainage,  fertilizers,  etc.,  he  has  received  all  the 
income  he  is  entitled  to.  He  who  goes  beyond  this  is  reaping  where 
he  has  not  sown,  and  is  to  that  extent  a  social  parasite. 

Speculation  in  farm  lands  would  be  stopped,  and  these  vast 
non-productive  funds  now  so  employed  (to  the  curse  of  society) 
would  be  diverted  into  industrial  channels,  in  investments  in  mills 
and  factories,  in  workshops  and  tools,  in  various  productive  enter- 
prises calling  for  the  employment  of  labor  and  capital  (to  the 
enrichment  of  society).  For  obviously  a  man  having  money  to 
invest  would  not  put  it  into  land  and  expect  to  reap  a  reward  by 
the  rise  in  value  of  land  (as  many  now  do),  because  this  increase. 


ARGUMENT  FOR  THE  SINGLE  TAX  395 

this  ''unearned  increment"  as  they  term  it,  would  be  taken  by 
society  that  creates  it.  Neither  could  he  buy  a  farm  and  expect 
to  sublet  it  at  a  profit,  while  he  retired  and  lives  in  ease  and  luxury 
off  his  tenants,  because  the  economic  rent  would  go  to  the  state, 
not  to  him.  Of  course,  the  farmer  who  had  put  improvements  on 
his  farm  of  great  value  could  and  w^ould  retire,  if  he  pleased,  and 
''rent"  this  farm,  but  the  land  value  rent  or  tax  would  go  to  the 
state,  while  his  "rent"  would  be  merely  the  interest  on  his  outlay 
for  improvements,  equipment,  tile,  stock,  etc.  Speculative  funds 
diverted  from  land  speculation  into  productive  capital  would 
actually  raise  wages  and  bring  general  prosperity,  say  the  single 
taxers,  and,  indeed,  abolish  poverty  from  the  earth. 

More  fundamental  yet,  is  the  argument  advanced  by  Henry 
George  in  his  work  "Progress  and  Poverty,"  his  chief  contention 
being  that  om'  boasted  increase  in  population  is  accompanied  with 
an  iron  law  of  wages,  interest,  and  rent,  namely,  wages  must  fall; 
interest  must  fall;  rent  must  increase.  In  short,  progress  means 
poverty — poverty  for  the  many,  wealth  for  the  few  who  appro- 
priate ground  rent.  His  logic  is  very  simple.  As  population  in- 
creases, there  are  more  mouths  to  feed.  More  food  is  needed.  It 
must  come  from  the  land.  The  supply  of  land  is  fixed.  It  cannot 
be  increased.  As  this  demand  on  the  land  steadily  grows  greater 
and  greater  and  more  food  must  be  wrung  from  the  soil,  food  prices 
must  rise;  land  values  must  rise;  rents  must  rise.  The  landlords 
wall  be  able  to  receive  a  larger  and  larger  share  of  the  products, 
leaving  less  and  less  for  labor  and  capital.  To  make  the  illustration 
concrete.  Here  is  a  ten-acre  field  of  wheat — and  the  country  is 
new  and  sparsely  settled.  This  field  must  furnish  bread  for  the 
man  and  his  mfe  and  two  children.  A  generation  later  (and  our 
population  has  doubled);  this  field  must  now  feed  eight  people. 
The  relative  scarcity  of  this  food  makes  it  dearer  than  it  was  before. 
This  is  equivalent  to  saying  that  the  value  of  the  land  is  more — 
that  its  economic  rent  has  increased.  These  eight  people  must  be 
fed  from  this  land,  and  the  owner  of  the  land  can  and  does  demand 
a  higher  rent  for  the  use  of  his  land — because  population  has 
increased,  not  because  he  has  improved  the  land.  Let  this  ten 
acre  field  stand  for  the  whole  United  States.  The  area  of  the 
continental  United  States  is,  in  round  numbers  three  and  a  half 
million  square  miles.  It  was  this  size  one  hundred  years  ago,  and 
will  be  this  size  a  hundred  years  hence.  But  the  population  to 
occupy  this  area  was  but  4,000,000  in  1790.  This  population  was 
nearly  doubled  by  1810,  reaching  l}/i  millions.    Thirty  years  later 


396  TAXATION  PROBLEMS 

it  was  again  doubled  (standing  at  17  millions  in  1840).  Thirty 
years  later  it  was  again  doubled  (standing  at  383^  millions  in 
1870).  Thirty  years  later  it  was  again  doubled  (standing  at  76 
millions  in  1900).  So  the  process  of  doubling  goes  on  every  thirty 
years.  The  food  supply  must  be  doubled  every  thirty  years.  And 
the  vacant  lands  are  long  since  all  occupied.  Is  Henry  George 
right  in  his  basic  argument  that  an  increase  in  food  supply  can  be 
had  only  at  increased  cost?  Must  each  added  bushel  of  wheat  be  a 
dearer  bushel  than  the  preceding?  If  so,  rents  must  rise.  Land 
values  must  increase  with  increase  in  population.  The  owner  of 
the  land  (the  ''appropriator  of  ground  rent ")  will  be  the  beneficiary. 

The  Question  at  Issue. — ^An  iron  law  of  rent  of  this  kind  is 
based  on  the  theory  of  ''diminishing  returns"  in  agriculture,  for 
agriculture  as  a  whole.  The  individual  farmer,  in  any  case,  doubt- 
less has  some  land  on  the  basis  of  increasing  returns  (where,  for 
instance,  increasing  his  investment  of  labor  or  capital  or  both  by 
10  per  cent  will  increase  his  returns  15  per  cent) ;  some  on  the  basis 
of  stationary  returns  (where,  for  instance,  increasing  his  invest- 
ment of  labor  or  capital  or  both  by  10  per  cent  will  increase  his 
yield  by  10  per  cent) ;  and  some  on  the  basis  of  diminishing  returns 
(where,  for  instance,  increasing  his  investment  of  labor  or  capital 
or  both  by  10  per  cent  will  increase  his  yield  by  5  per  cent). 

The  food  supply  can  be  increased.  It  can  be  increased  by  using 
more  labor — farming  more  intensively;  by  using  better  machinery; 
by  using  better  tillage  methods;  by  using  better  seed  selection;  by 
using  pure  bred  live  stock;  by  proper  animal  nutrition;  by  more 
scientific  crop  rotation;  by  introducing  new  legimies  and  farm 
crops;  and  in  many  other  ways.  The  question  at  issue  is:  Does 
each  added  bushel  of  crop  cost  more  than  the  preceding  bushel? 
In  other  words,  has  agriculture  reached  the  state  of  diminishing 
returns  in  the  United  States?  Very  clearly,  a  general  answer 
cannot  be  given.  Rents  have  fallen  in  some  sections,  and  risen  in 
others.  Some  farms  are  operated  on  the  basis  of  diminishing 
returns;  some  on  the  basis  of  increasing  returns.  The  various 
surveys  that  have  been  made  and  are  now  being  made  clearly 
illustrate  this  truth.  If  all  farmers  were  operating  on  the  basis 
of  the  few  best  farmers,  the  increase  in  food  supply  would  be  so 
enormous  as  to  cause  a  slump  in  prices  of  foodstuffs,  and  a  conse- 
quent fall  in  rents  of  land. 

If  the  Single  Tax  Were  Applied. — The  single  taxers  would 
apply  their  single  tax  to  both  city  and  farm  land,  but  base  their 
chief  arguments  on  the  city  land.    For  it  is  in  city  lands  that  ground 


PROTECTIVE  TARIFF  397 

rents  are  conspicuously  high.  Our  discussion  in  this  book,  how- 
ever, is  concerned  almost  entirely  with  farm  lands.  While  the 
large  claims  of  the  single  taxers  as  to  the  efficacy  of  the  single 
tax  are  doubtless  far  from  being  one  hundred  per  cent  true,  yet 
they  are  in  part  true  so  far  as  urban  conditions  are  concerned. 
Here  land  has  only  site  value.  But  this  view  has  little  validity  as 
applied  to  farm  lands.  The  site  of  the  land  is  secondary;  its  fer- 
tility is  primary.  And  its  fertility,  if  maintained  and  increased, 
is  due  in  large  part  to  the  brains  of  the  owner.  If  the  single  tax 
were  applied  to  farm  lands,  it  would  have  the  immediate  effect  of 
increasing  the  taxes  on  those  lands  that  are  unimproved  but  yet 
have  use  value;  on  small  farms  with  costly  buildings  and  improve- 
ments the  taxes  would  be  lessened;  on  the  average  farm  with 
average  buildings  the  improvements  exempted  would  just  about 
offset  the  increase  in  the  land  tax — or  in  other  words,  there  would 
be  little  change  in  the  size  of  the  tax.  In  fact,  the  Minnesota 
State  Tax  Commission,  after  giving  very  careful  and  sympathetic 
consideration  to  the  whole  single  tax  question — both  in  theory 
and  in  practice — reached  the  conclusion  (in  their  1912  Report) 
that,  *'To  the  average  owner  and  occupant  of  a  home  or  a  farm  the 
change  (to  a  single  tax)  would  probably  not  mean  much  one  way 
or  the  other."  ^ 

II.    PROTECTIVE    TARIFF 

Introductory  Statement. — The  United  States  ranks  among  the 
'^ protective  tariff"  countries  of  the  world.  With  the  exception  of 
about  thirty  years  of  our  history  (the  period  from  1830  to  the  Civil 
War,  1860)  we  have  been  frankly  for  high  ''protection."  A  pro- 
tective tariff  takes  two  forms:  (1)  it  may  be  so  high  as  to  prohibit 
entirely  the  importation  of  the  foreign  competing  article;  (2)  it 
may  impose  a  duty,  not  prohibitive,  on  imports,  causing  the  im- 
ported article  to  sell  so  high  in  America  as  not  to  compete  on  even 
terms  with  the  American  made  article.  The  American  manufac- 
turer, in  such  a  case,  is  able  to  charge  more  for  his  wares,  evidently, 
than  if  competition  were  unrestricted,  and  the  ultimate  consumer 
is  the  one  who  pays  the  tax.  The  first  strictly  high  protective 
tariff  act  was  the  Act  of  1816.  The  duties  were  raised  in  the  next 
act — that  of  1824.  Four  years  later  came  a  substantial  increase, 
with  the  so-called  "Bill  of  Abominations"  of  1828.  Since  this  led 
to  the  near-secession  of  South  Carolina  from  the  Union,  and  the 
Nullification  (of  the  tariff)  controversy,  rates  were  lowered  in  the 
next  acts.     Tariff  and  Slavery,  Nullification  and  Secession,  then 

^  Third  Biennial  Report,  Minnesota  State  Tax  Commission,  1912,  p.  177. 


398  '       TAXATION  PROBLEMS 

kept  Congress  occupied  for  thirty  years,  till  the  Civil  War  settled 
the  slavery  issue.  The  subsequent  tariff  acts,  namely,  1883,  1890, 
1894,  1897,  1909,  and  1913  were  all  highly  protective  to  the  manu- 
facturing industry.  After  the  abolition  of  slavery  in  the  South, 
and  the  growth  of  modern  industrialism  in  that  section  under  free 
labor,  the  South,  too,  came  to  favor  a  protective  tariff  on  such 
products  as  were  manufactured  there.  But  prior  to  the  Civil  War, 
the  tariff  was  referred  to,  quite  generally,  as  a  sectional  issue,  the 
North  being  the  section  benefited. 

Theory  and  Practice. — Most  great  doctrines,  like  the  doctrine 
of  a  protective  tariff,  should  be  tested  by  both  theory  and  practice. 
The  controversy  in  this  country  over  the  theory  of  protection  is 
apparently  as  far  from  abatement  now  as  it  was  at  its  inception  a 
hundred  and  thirty  years  ago.  It  is  more  profitable,  therefore,  first" 
to  examine  very  briefly  the  workings  of  a  protective  tariff,  as  related- 
to  agriculture,  before  giving  attention  to  the  theory  of  the  subject. 

Iq  New  England. — New  England  is  the  one  section  of  the  coun- 
try in  which  the  cycle  of  protection  is  most  nearly  complete,  and  it 
will  therefore  be  used  to  illustrate  the  workings  of  our  protective 
system.  Since  the  first  ''protective  tariffs"  were  designed  solely 
to  protect  manufacturing,  and  since  manufacturing,  prior  to  the 
Civil  War,  was  confined  almost  wholly  to  the  North,  it  seems  fair 
to  turn  to  this  section  to  study  the  fruits  of  the  protective  system. 

The  first  tariff  act  ever  enacted  by  this  government  (July  4, 
1789)  bore  this  preamble: 

"Sec.  1.  Whereas  it  is  necessary  for  the  support  of  government,  for  the 
discharge  of  the  debts  of  the  United  States,  and  the  encouragement  and  pro- 
tection of  manufactures,  that  duties  be  laid  on  goods,  wares  and  merchandise 
imported:   Be  it  enacted  ..." 

Condition  of  the  Country  in  1789. — Documents  of  that  day 
bespoke  a  period  of  prosperity  for  agriculture,  for  labor,  and  for? 
manufactures.  The  abundance  of  free  land  made  it  possible  for 
any  man  of  ordinary  ability  to  own  a  good  home  and  a  good  farm. 
The  second  profound  influence  of  free  land  was  to  keep  wages  high. 
One  of  the  early  fathers  had  written  many  years  before  this  time,, 
"Our  children's  children  will  hardly  see  this  great  continent  filled^ 
with  people,  soe  that  our  servants  will  still  desire  freedom  to  plant 
for  themselves,  and  not  stay  but  for  verie  great  wages."  A  royal 
official  wrote  in  1723,  "North  America  containing  a  vast  tract  of 
land,  every  one  is  able  to  procure  a  piece  of  land  at  an  inconsider- 
able rate,  and  therefore  is  fond  to  set  up  for  himself  rather  than 
work  for  hire.    This  makes  labor  continue  very  dear,  a  common 


CONDITION  OF  THE  COUNTRY  IN  1789  399 

laborer  usually  earning  three  shillings  by  the  day  ..."  Albert 
Gallatin,  when  ex-Secretary  of  the  Treasury,  reported  that  as 
early  as  1810,  there  were  north  of  the  Potomac  fifty  mills  for  spin- 
ning cotton  in  operation,  and  twenty-five  more  went  into  operation 
the  ensuing  year.  The  date  mentioned  by  Gallatin  is  interesting, 
since  the  protective  policy  was  not  apphed  to  cotton  manufactures 
till  1816.  And  finally  we  may  fall  back  on  the  most  noted  report 
of  the  period,  Hamilton's  Report  on  Manufactures  (1791),  in  order 
to  determine  the  condition  of  prosperity  already  reached  by  manu- 
factures, under  the  natural  protection  of  3,000  miles  of  sea  between 
them  and  the  competition  of  the  mother  country,  and  only  slow 
sailing  vessels  for  transportation.    Hamilton  wrote  as  follows: 

"To  all  the  arguments  which  are  brought  to  evince  the  impracticability 
of  success  in  manufacturing  estabHshments  in  the  United  States,  it  might  have 
been  a  sufficient  answer  to  have  referred  to  the  experience  of  what  has  already 
been  done;  it  is  certain  that  several  important  branches  have  grown  up  and 
flourished  with  a  rapidity  which  surprises,  affording  an  encouraging  assurance 
of  success  in  future  attempts.  Of  these  it  may  not  be  improper  to  enumerate 
the  most  considerable: 

1.  Of  Skins. — Tanned  and  tawed  leather,  dressed  skins,  shoes,  boots,  and 
sUppers,  harness  and  saddlery  of  all  kinds,  portmanteaus  and  trunks,  leather 
breeches,  gloves,  muffs,  and  tippets,  parchment  and  glue. 

2.  Of  Iron. — Bar  and  sheet  iron,  steel,  nail  rods  and  nails,  implements  of 
husbandry,  stoves,  pots,  and  other  household  utensils,  the  steel  and  iron  work 
of  carriages  and  for  shipouilding,  anchors,  scalebeams,  and  weights,  and  various 
tools  of  artificers,  arms  of  different  kinds,  though  the  manufacture  of  these 
last  has  of  late  diminished  for  want  of  demand. 

3.  Of  Wood. — Ships,  cabinet  wares  and  turnery,  wool  and  cotton  cards, 
and  other  machinery  for  manufactures  and  husbandry,  mathematical  instru- 
ments, cooper  wares  of  every  kind. 

4.  Of  Flax  and  Hemp. — Cables,  sail-cloth,  cordage,  twine  and  packthread. 

5.  Bricks,  and  coarse  tiles  and  potter's  wares. 

6.  Ardent  spirits  and  malt  liquors. 

7.  Writing  and  printing  paper,  sheathing  and  wrapping  paper,  paste- 
boards, fuller's  or  press  papers,  paper  hangings. 

8.  Hats  of  fur  and  wool,  and  of  mixtures  of  both,  women's  stuff  and 
silk  shoes. 

9.  Refined  sugars. 

10.  Oils  and  animals  and  seeds,  soaps,  spermaceti  and  tallow  candles. 

11.  Copper  and  brass  wares  (particularly  utensils  for  distillers,  sugar 
refiners  and  brewers),  andirons  and  other  articles  for  household  use,  philo- 
sophical apparatus. 

12.  Tin  wares  for  most  purposes  of  ordinary  use. 

13.  Carriages  of  all  kinds. 

14.  Snuff,  chewing  and  smoking  tobacco. 

15.  Starch  and  hair  powder. 

16.  Lampblack  and  other  painters'  colors. 

17.  Gunpowder. 

Also  vast  amount  of  household  manufacture  (coarse  cloth,  coating,  serges, 
flannels,  linsey-woolseys,  hosiery,  coarse  fustians,  jeans  and  mushns,  checked 
and  striped  cotton  and  linen  goods,  bed  ticks,  coverlets,  tow  linens,  shirtings, 
sheeting,  towels,  table  linen).     Also  flour,  pitch,  tar,  turpentine,  etc." 


400  TAXATION  PROBLEMS 

Hamilton's  Report  is  generally  quoted  by  the  friends  of  pro- 
tection as  the  mighty  bulwark  of  their  faith.  It  is  an  able  summary 
of  the  argimients  both  for  and  against  protection,  Hamilton's  own 
conclusions  being  for  protection.  He  takes  for  granted  that  manu- 
factures are  needed  (to  furnish  a  home  market,  and  for  other  rea- 
sons) ;  he  assumes  that  protection  is  needed  in  order  to  have  manu- 
factures because  foreign  governments  were  using  bounties,  etc., 
and  because  of  (1)  the  scarcity  of  labor,  (2)  the  dearness  of  labor, 
and  (3)  the  want  of  capital.  He  does,  however,  refer  to  the  many 
towns  ''of  size,"  as  indicating  a  growing  supply  of  labor;  his  Ust 
of  successful  manufactures  has  just  been  given  above,  indicating 
that  without  government  aid  manufacturing  was  thriving.  Look- 
ing into  the  future  workings  of  protection,  he  emphasized  these 
two  points,  namely, 

(1)  UtiHzation  of  women  and  child  labor; 

(2)  Utilization  of  immigrants. 

''But  there  are,"  says  Hamilton,  "circumstances  which  have  been 
already  noticed  with  another  view,  that  materially  diminish  every- 
where the  effect  of  scarcity  of  hands.  These  circumstances  are: 
the  great  use  which  can  be  made  of  women  and  children  .  .  . 
lastly,  the  attraction  of  foreign  inamigrants  ...  It  is  a  natural 
inference  from  the  experience  we  have  already  had,  that  as  soon 
as  the  United  States  shall  present  the  countenance  of  a  serious 
prosecution  of  manufactures,  as  soon  as  foreign  artists  shall  be 
made  sensible  that  the  state  of  things  here  affords  a  moral  certainty 
of  employment  and  encouragement,  competent  numbers  of  Euro- 
pean workmen  will  transplant  themselves  effectually  to  insure  the 
success  of  our  design." 

Hamilton's  forecast  of  the  future  was  correct,  for  these  two 
things  happened — women  and  child  labor  was  utilized,  and  inami- 
grants did  flock  to  the  factories.  The  statistics  gathered  after 
nearly  a  hundred  years  of  protection  to  manufactures  tell  the 
story.  The  platform  adopted  by  one  of  the  major  political  parties 
in  1912  reaffkmed  its  belief  in  the  protective  tariff  policy,  crediting 
this  policy  with  protecting  our  workmen  against  (1)  local  compe- 
tition, (2)  foreign.  But  the  statistics,  quoted  below,  do  not  reveal 
this  American  workman  in  these  protected  factories  (unless  the 
word  American  workman  means  women  and  children) ;  neither  do 
they  reveal  absence  of  competition  by  the  foreign  laborer  (but 
rather  the  success  of  the  "foreigner"  in  driving  the  "American 
workman"  out  of  the  factory). 


NEW  ENGLAND  AGRICULTURE 


401 


Number  and  Per  Cent  of  Americans  and  Foreign  Bom,  Males  and  Females,  in 
Ifi  Representative  Cotton  Mills  in  Maine,  New  Hampshire^  Massachusetts 
and  Rhode  Island."^ 

(After  100  years  of  Protection.) 


Race 

16  and  over 

Under  16 

Total,  all  ages 

Males 

Females 

Males 

Females 

No.  Per  cent 
286-  4.5 
604-  9.5 
2610-40.9 
334-  5.2 
303-  4.8 
920-14.4 
322-  5.0 
1001-15.7 

No.  Per  cent 

1134-  8.2 

1350-  9.7 

5633-40.5 

2288-16.5 

249-   1.8 

1759-12.6 

680-  4.9 

803-  5.8 

No.  Per  cent 
76-  9.7 
87-11.2 
410-52.6 
50-  6.4 
36-  4.6 
26-  3.3 
34-  4.4 
61-  7.8 

No.  Per  cent 
73-  8.5 
73-  8.5 
499-58.1 
63-  7.3 
35-  4.1 
38-  4.4 
41-  4.8 
37-  4.3 

No.  Per  cent 
1569-  7.2 

English     

2114-  9.6 

French  Canadian.  . 
Irish    

9152-41.8 
2735-12.5 

Italian 

623-  2.8 

Polish 

2743-12.5 

Portuguese 

Others 

1077-  4.9 
1902-  8.7 

6380-100 

13896-100 

780-100 

859-100 

21915-100 

Note. — Seven  out  of  each  hundred  "workmen"  are  Americans.  Two-thirds  of 
these  "workmen"  are  women  or  girls.  This  illustrates  how  literally  Hamilton's  prophesy 
was  fulfilled. 

New  England  Agriculture. — Early  protection  to  manufacturing 
gave  this  occupation  a  form  of  preferential  treatment  which  enabled 
it  to  draw  the  boys  and  girls  from  the  farms.  The  ''home  market," 
consisting  of  the  numerous  manufacturing  towns  which  cover  New 
England,  did  not  prove  sufficient  stimulus  to  keep  agricultm-e 
from  sagging.  A  hundred  years  of  this  history,  and  manufacturing 
had  apparently  reached  its  zenith,  agricultiu*e  its  nadir.  New 
England  became  famous  throughout  the  country  as  the  land  of 
"abandoned  farms." 

A  chance  news  item  in  the  Rural  New  Yorker  stated  the  matter 
vividly  in  these  words : 

"  Farming  conditions  in  New  England  are  at  a  critical  point.  New  England 
imports  85  per  cent  of  her  food  supplies  for  man  and  beast.  She  can  and  should 
produce  85  per  cent  or  more  thereof.  The  seriousness  of  the  situation  is  attested 
by  the  recent  formation  of  a  league  of  manufacturers  in  Massachusetts  to 
promote  agriculture  in  order  that  New  England's  industrial  supremacy  may 
not  be  further  endangered  by  enforced  removal  to  centers  of  larger  food  pro- 
duction and  lower  food  costs.    J.  S.  B."  ^ 

The  Eastern  States  Agricultural  and  Industrial  League  (as  the 
league  referred  to  above  is  termed)  is  backed  by  large  capital, 
and  is  now  making  a  strenuous  effort  to  rehabilitate  agriculture  in 
New  England.  In  a  prospectus  of  theirs,  describing  the  objects 
of  the  new  league,  they  present  the  following  melancholy  figures 
showing  the  low  estate  of  rural  life  in  New  England. 

2  Report  on  Condition  of  Women  and  Child  Wage  Earners  in  the  United 
States,  19  vols.  61  Cong.  2  Sess.  Sen.  Doc.  645,  Vol.  1,  p.  99.' 

3  Rural  New  Yorker,  March  29,  1919,  p.  572,  New  York  City. 

26 


402  TAXATION  PROBLEMS 

"  New  England  Industrial  Supremacy  Imperilled  by  Agricultural  Decline. 
— From  1860  to  1910  there  was  a  startling  decline  in  New  England  agriculture, 
clearly  indicated  by  the  following  facts: 

Farm  land  under  cultivation  decreased  5,103,073  acres,  or  42  per  cent. 

Cattle  decreased  from  56  to  20  per  100  population. 

Sheep  decreased  from  60  to  4  per  100  population. 

Population  of  828  rural  towns  decreased  32  per  cent. 

Total  population  increased  110  per  cent. 

Wage  earners  increased  during  this  same  period  from  390,806  to  1,191,290, 
or  359  per  cent. 

New  England  must  to-day  import  over  75  per  cent  of  the  food  consumed. 

As  long  as  the  food  production  in  New  England  becomes  less  in  comparison 
with  the  consumption,  the  differential  must  increase  and  ultimately  reach  a 
point  where  it  will  become  increasingly  difficult  for  New  England  to  maintain 
its  industries. 

A  successful  farming  community  is  one  of  the  strongest  factors  in  main- 
taining social  stabiUty.  The  farmer  is  not  only  a  producer  of  the  primary 
source  of  wealth,  but  is  also  a  property  owner  and  a  small  employer  of  labor 
and  naturally  stands  for  stability." 

In  order  to  secure  an  increasing  element  of  "stability"  of 
society,  and  in  order  to  overcome  the  industrial  handicap  of  dear 
food,  the  League  is  promoting  agriculture,  functioning  through 
these  various  agencies:  The  Eastern  States  Agricultural  and  Indus- 
trial Exposition  (to  improve  herds,  crops,  fruits,  and  farm  practice) ; 
Market  Bureau;  Farm  Finance  Bureau;  Boys'  and  Girls'  Bureau; 
Publicity  Bureau;  New  England  Farm  and  Food  Foundation.  The 
last  named  agency  "seeks  to  combine  from  ten  to  fifteen  thousand 
manufacturing,  mercantile  and  banking  institutions  with  the 
progressive  farmers  of  New  England,  in  a  joint  effort  to  make 
effective  such  agencies  as  will  enable  the  farmers  to  introduce 
modern  methods  for  the  purpose  of  greater,  better  and  more 
economic  production,  and  to  effect  a  more  efficient  system  of 
distribution,  as  well  as  estabhsh  adequate  credit  facilities." 

It  is  not  claimed  that  the  protective  tariff  caused  this  decline 
in  New  England  agriculture,  but  only  that  it  contributed  largely 
to  this  end  by  disturbing,  artificially,  the  balance  that  first  existed 
among  agriculture,  manufacturing,  and  commerce  in  New  England. 
The  law  created  an  artificial  status.  It  has  now  reached  its  logical 
fruition.  Many  a  shrewd  Yankee  farmer  is  still  raising  wheat  for 
his  New  England  cousins — only  he  now  is  raising  this  wheat  in 
Kansas  and  Nebraska,  where  one  day's  work  will  produce  much 
more  wheat  than  in  New  England,  transportation  costs  included. 

Webster's  great  tariff  speech  of  1824  set  forth  the  true  situation 

as  concerned  New  England,  a  region  then  enjoying  a  prosperous 

agriculture  and  a  prosperous  commerce.    He  said: 

*' With  me  it  is  a  fundamental  axiom,  it  is  interwoven  with  all  my  opinions, 
that  the  great  interests  of  the  country  are  united  and  inseparable;  that  agri- 


WALKER'S  REPORT  403 

culture,  commerce,  and  manufactures  will  prosper  together,  or  languish 
together,  and  that  all  legislation  is  dangerous  which  proposes  to  benefit  one 
of  these  without  looking  to  consequences  which  may  fall  on  the  others." 

When  Congress  singled  out  one  of  these  three  interests  and  pen- 
sioned it,  so  to  speak,  and  bestowed  on  it  special  favor,  special 
privileges,  this  favored  industry,  naturally  forged  ahead  of  the 
other  two  in  the  race.  Congress  did  not ' '  look  to  the  consequences ' ' 
which  would  ''fall  on  the  others."  Both  commerce  and  agriculture 
in  New  England  steadily  fell  further  and  further  behind  in  the 
competitive  rate.  Hence  the  lopsided  growth  of  the  present  day, 
and  the  belated  effort  to  take  out  of  manufacturing  large  sums 
of  money  and  put  them  back  into  agriculture.  This  is  not  done 
now  as  a  charity  to  agriculture,  but  to  obviate  the  ''industrial 
handicap  of  dear  food"  and  to  establish  islands  of  "stability"  in 
the  turbulent  industrial  sea  of  foreign  wage  earners  who  now  com- 
pose the  typical  New  England  community. 

Gallatin's  Memorial. — ^Albert  Gallatin,  writing  his  Memorial 
on  the  Tariff  in  1831,  paid  attention  to  the  various  theories  of  pro- 
tection promulgated  by  Hamilton.  Speaking  of  the  "home 
market"  for  agricultural  products,  he  said  that  flour  prices  rose 
and  fell  with  foreign  demand,  and  not  with  the  growth  of  domestic 
manufactures;  that  the  "foreign  market,"  therefore,  deserved 
consideration.  Foreign  commerce  is,  he  declared,  exactly  like 
domestic  commerce  in  principle;  unrestricted  intercourse  between 
sections  is  needed. 

Prosperity  and  high  wages  he  connected  in  no  way  with  the 
tariff.  Prosperity  he  attributed  to  our  vast  natural  resources.  On 
labor  he  said,  "After  two  centuries  of  free  commerce  with  Great 
Britain  and  fifty  years  of  similar  intercourse  with  the  rest  of  the 
world,  the  price  of  labor  continues  without  alteration  to  be  higher 
in  the  United  States  than  in  England  or  any  other  country." 

Walker's  Report. — Robert  J.  Walker,  Secretary  of  the  Treasury, 
made  one  of  the  few  notable  contributions  to  the  tariff  discussion, 
in  his  Report  for  December  3,  1845.  He  foretold  with  uncanny 
accuracy  the  labor  difficulties  of  the  factories,  particularly  the  low- 
wage  issue  which  formed  a  very  unpleasant  feature  of  the  New 
England  factory  system  till  the  first  decade  of  the  twentieth  century. 

Secretary  Walker  reported  to  Congress  in  part  as  follows: 

Labor  and  Capital. — Capital's  power  over  wages. — "When  the  number  of 
manufactures  is  not  great,  the  power  of  the  system  to  regulate  the  wages  of 
labor  is  inconsiderable;  but  as  the  profit  of  capital  invested  in  manufactures 
is  augmented  by  the  protective  tariff,  there  is  a  corresponding  increase  of 
power,  until  the  control  of  such  ca"pital  over  the  wages  of  labor  becomes  irre- 


404  TAXATION  PROBLEMS 

sistible.  As  this  power  is  exercised  from  time  to  time,  we  find  it  resisted  by 
combinations  among  the  working  classes,  by  turning  out  for  higher  wages, 
or  for  shorter  time;  by  trades-union;  and  in  some  countries,  unfortunately,  by 
violence  and  bloodshed.  But  the  government,  by  protective  duties,  arrays 
itself  on  the  side  of  the  manufacturing  system,  and  by  thus  augmenting  its 
wealth  and  power,  soon  terminates  in  its  favor  the  struggle  between  man  and 
money — between  capital  and  labor.  When  the  tariff  of  1842  was  enact^d^ 
the  maximum  duty  was  20  per  cent.  By  that  act  the  average  of  duties  on 
the  protected  article  was  more  than  doubled.  But  the  wages  of  labor  did  not 
increase  in  a  corresponding  ratio,  or  in  any  ratio  whatever.  On  the  contrary, 
whilst  wages  in  some  cases  have  diminished,  the  prices  of  many  articles  used 
by  the  working  classes  have  greatly  appreciated. 

Profits. — ^A  protective  tariff  is  a  question  regarding  the  enhancement  of 
the  profit  of  capital.  That  is  the  object,  and  not  to  augment  the  wages  of 
labor,  which  would  reduce  those  profits.  It  is  a  question  of  percentages,  and 
is  to  decide  whether  money  vested  in  our  manufactures  shall,  by  special 
legislation,  yield  a  profit  of  10,  20  or  30  per  cent,  or  whether  it  shall  remain 
satisfied  with  a  dividend  equal  to  that  accruing  from  the  same  capital  invested 
in  agriculture,  commerce,  or  navigation. 

"No  prejudice  is  felt  by  the  Secretary  of  the  Treasury  against  manufac- 
turers. His  opposition  is  to  the  protective  system,  and  not  to  classes  or 
individuals.  He  doubts  not  that  the  manufacturers  are  sincerely  persuaded 
that  the  system  which  is  a  source  of  so  much  profit  to  them  is  beneficial  also 
to  the  country.  He  entertains  a  contrary  opinion,  and  claims  for  the  oppo- 
nents of  the  system  a  settled  conviction  of  its  injurious  effects. 

Free  Trade  Principle. — Soil,  climate,  and  other  causes  vary  very  much,  in 
different  countries,  the  pursuits  which  are  most  profitable  in  each;  and  the 
prosperity  of  all  of  them  will  be  best  promoted  by  leaving  them  unrestricted 
by  legislation,  to  exchange  with  each  other  those  fabrics  and  products  which 
they  severally  raise  most  cheaply.  This  is  clearly  illustrated  by  the  perfect 
free  trade  which  exists  among  all  the  States  of  the  Union,  and  by  the  acknowl- 
edged fact  that  any  one  of  these  States  would  be  injured  by  imposing  duties 
upon  the  products  of  the  others.  It  is  generally  conceded  that  reciprocal 
trade  among  nations  would  best  advance  the  interests  of  all." 

Secretary  Walker  also  discussed  the  ''home  market"  argument 
— the  favorite  argument  used  by  the  manufacturers  to  convince 
farmers  that  prosperity  was  being  ''passed  around,"  and  to  secure 
the  support  of  farmers  for  a  taxing  system  which  took  money  from 
the  pocket  of  the  farmer  and  transferred  it  to  the  pocket  of  the 
manufacturer.  We  have,  reasoned  Walker,  a  surplus  of  agricul- 
tural products;  therefore  we  must  have  a  foreign  market;  the  real 
question  is  then,  not  the  home  market,  but  how.  best  develop  a 
foreign  market?    Walker's  answer  was  free  trade. 

Hamilton's  Errors. — As  the  first  Secretary  of  the  Treasury, 
Hamilton,  a  young  man  of  thirty-two,  was  confronted  with  gigantic 
national  problems  of  credit,  of  money  and  banking,  and  of  revenues, 
and  with  few  precedents  to  guide  him.  The  wonderful  genius  he 
displayed  in  successfully  and  rapidly  solving  his  major  problems 
has  given  him  a  rank  in  history  as  the  second  greatest  man  pro- 
duced by  the  Revolution.  He  had  never  seen  Europe,  but  he  was 
greatly  influenced  in  his  decisions  of  policy  by  European  practices. 


PROTECTION  OF  AGRICULTURE  AND  LABOR  405 

Thus,  in  his  two  great  reports,  his  Report  on  the  Coinage,  and  his 
Report  on  Manufacturers,  both  made  in  1791,  he  seems  to  have 
decided  the  two  issues  involved  (BimetaUism,  Protection)  on  the 
basis  of  what  was  actually  the  practice  of  the  moment  in  Europe, 
rather  than  on  the  basis  of  his  own  logic.  For  instance,  there  is 
no  better  statement  of  Gresham's  Law  anywhere  than  in  his 
report  on  the  Coinage,  for  he  clearly  shows  the  impossibility  of 
maintaining  a  double  standard  of  value.  But  his  conclusions  are 
in  favor  of  bimetallism,  largely,  it  would  seem,  because  no  Euro- 
pean country  had  yet  adopted  the  single  standard,  and  England 
was  several  years  off  from  the  status.  It  took  a  great  many  years 
for  the  country  to  correct  this  error.  And  so  with  his  tariff  policy. 
He  was  faced  with  the  actual  condition  of  protection  in  various 
forms  in  use  by  foreign  governments.    His  words  on  this  point  are : 

''But  the  greatest  obstacle  of  all  to  the  successful  prosecution  of  a  new 
branch  of  industry,  in  a  country  in  which  it  was  before  unknown,  consists, 
as  far  as  the  instances  apply,  in  the  bounties,  premiums,  and  other  aids  which 
are  granted  in  a  variety  of  cases  by  the  nations  in  which  the  establishments  to 
be  imitated  are  previously  introduced.  It  is  well  known  that  nations  grant 
bounties  on  the  exportation  of  particular  commodities  to  enable  their  own 
workmen  to  undersell  and  supplant  all  competitors  in  the  countries  to  which 
those  commodities  are  sent.  Hence  the  undertakers  of  a  new  manufacture 
have  to  contend  not  only  with  the  natural  disadvantages  of  a  new  undertaking, 
but  with  the  gratuities  and  remunerations  which  other  governments  bestow. 
To  be  enabled  to  contend  with  success  it  is  evident  that  the  interference  and 
aid  of  their  own  governments  are  indispensable." 

The  Corn  Laws  of  England  furnish  the  outstanding  example 
of  government  ''protection"  to  one  interest,  in  this  case,  the 
growers  of  wheat.  Since  the  whole  evil  system  of  Corn  Laws  has 
long  since  been  swept  into  England's  large  rubbish  heap  entitled 
''Reforms,"  even  the  champions  of  protection  in  England  would 
not  defend  this  unhappy  venture  in  "protection."  In  becoming 
the  first  gold-standard  country  and  the  first  free-trade  country, 
England,  Hamilton's  chief  example,  showed  that  the  great  Secre- 
tary's two  errors  came  from  confusing  the  practice  of  the  moment 
with  the  established  policies  of  the  future. 

Present  Theory  of  Protection  of  Agriculture  and  Labor. — 
"Wages  are  high  because  of  the  tariff,"  is  now  a  familiar  saying, 
on  the  part  of  some  very  respectable  politicians,  about  election 
time  in  the  United  States.  This  is  a  strange  confusing  of  cause 
and  effect.  First,  a  tariff  was  asked  because  wages  were  high. 
Natural  resources  then  (and  now)  were  the  chief  cause  of  high 
wages.  A  protective  tariff  does  not  keep  out  foreign  labor;  indeed, 
in  the  factories  enjoying  the  most  protection  are  found  the  most 


406  TAXATION  PROBLEMS 

foreign-born  laborers.  This  competition  lowers  wages.  In  no 
instance  is  it  apparent  that  tariff  on  manufactured  goods  does  or 
can  raise  wages.  A  prohibitive  tariff  on  labor  (immigration)  would 
do  this,  but  such  a  form  of  protection  has  never  been  advocated 
by  factory  owners.  The  farmer  was  likewise  told  that  a  tariff  of 
ten  cents  a  bushel  on  corn  (the  rate  some  time  in  effect)  protected 
him  to  that  extent.  Since  we  were  exporting  corn,  not  importing 
it,  it  is  obvious  that  such  a  tariff  could  have  no  effect  on  price. 
In  other  words,  had  the  tariff  been  ten  dollars  a  bushel  instead  of 
ten  cents  a  bushel,  the  price  of  corn  in  America  would  have  re- 
mained the  same,  uninfluenced,  one  way  or  the  other,  by  it.  As 
a  matter  of  fact,  while  the  tariff  on  corn  was  ten  cents  a  bushel, 
many  farmers  in  Kansas  and  Nebraska,  owing  to  larger  production 
one  season,  sold  their  corn  at  nine  cents  a  bushel.  The  United 
States  has  been  an  exporter  (not  an  importer)  of  wheat  from  1776 
to  date.  Yet  a  tariff  of  twenty-five  cents  a  bushel  was  in  effect 
for  many  years,  not  to  raise  the  price  of  wheat  (which  was  fixed 
in  the  world's  markets  buying  the  surplus),  but  to  give  color  to  the 
idea  that  the  farmer  also,  like  the  manufacturer,  was  enjoying 
''protection.^'  So  the  protective  tariff  on  the  farmers'  crops  has 
served  its  real  purpose,  namely,  to  keep  the  farmer  satisfied  with 
the  protective  system  while  contributing  cheerfully  to  its  costs, 
and  reaping  none  of  its  benefits. 

QUESTIONS  ON  THE  TEXT 

1.  Define  Single  Tax.    Illustrate  its  meaning. 

2.  Under  the  single  tax,  what  change  would  there  be  in  the  incidence  of 

taxation?    Refer  particularly  to  question  of  city  and  farm  lands. 

3.  State  the  arguments  for  the  single  tax  referring  to  privilege;  to  Henry 

George's  "Progress  and  Poverty." 

4.  Does  the  "iron  law  of  rent"  establish  the  claims  of  the  single  taxeis? 

Reasons  for  and  against.  . 

5.  What  is  the  future  outlook  for  a  continued  rise  in  rent? 

6.  If  the  single  tax  were  applied,  how  would  it  affect  the  farmer? 

7.  State  also  conclusions  of  Minnesota  Tax  Commission. 

8.  Define  Protective  Tariff.    Illustrate  its  meaning. 

9.  What  has  been  the  tariff  pohcy  of  the  United  States  during  the  past 

100  years? 

10.  In  what  sense  does  New  England  illustrate  the  workings  of  our  protec- 

tive system? 

11.  What  was  the  economic  condition  of  the  country  in  1789?    Illustrate. 

12.  Quote  Hamilton  as  to  the  prosperity  of  manufacturing. 

13.  Discuss  Hamilton's  Report  on  Manufactures;  need  of  protection;  women 

and  child  labor;  immigrant  labor. 

14.  Show  the  accuracy  of  Hamilton's  forecast  of  the  future.  ' 

15.  Compare  New  England  agriculture  and  manufacturing.     Cite  article  in 

Rural  New-Yorker. 
16    Describe  the  need,  purpose  and  method  of  the  Eastern  States  Agricultural 
and  Industrial  League. 


REFERENCES  407 

17.  Cite  statistics  on  rural  conditions  in  New  England. 

18.  Show  the  need  of  "cheap  food"  and  ''stabihty"  of  society,  from  the  stand- 

point of  the  manufacturer. 

19.  To  what  extent,  if  any,  is  the  tariff  responsible  for  the  present  condition 

of  New  England  agriculture? 

20.  Cite  Webster's  1824  speech  on  this  point. 

21.  Cite   Albert  Gallatin's  arguments  on  the  "home  market"  theory;  on 

high  wages. 

22.  Cite  the  arguments  of  Secretary  Walker  on  the  factory-  labor  problem; 

relation  of  protection  to  high  wages;  profits;  free  trade;  home  markets. 

23.  Cite  and  explain  Hamilton's  two  errors. 

24.  Cite  modern  theories  of  protection  to  labor  and  agriculture.    Criticize. 

25.  What  is  the  relation  of  the  farmer  to  the  protective  tariff? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Resolved,  that  our  protective  tariff  poUcy  has  added  to  the  prosperity 

of  American  agriculture. 

2.  Debate.  Resolved,  that  the  Single  Tax,  as  proposed  by  Henry  George, 

should  be  put  into  operation  for  all  national,  state  and  local  purposes. 

3.  Assuming  that  free  trade  is  desirable  as  among  all  the  so-called  white 

races,  should  or  should  not  the  principle  be  extended  to  include  all  races 
of  the  earth? 

4.  Show  the  fallacy  implied  in  the  words  "cheap  labor "  in  the  following 

sentences:    We  cannot  compete  with  the  cheap  labor  of  Europe.    We 
cannot  compete  with  the  cheap  labor  of  the  Orient. 

5.  Show  by  citing  reliable  data  that  in  American  factories  paying  the  highest 

wages,  the  labor  cost  of  the  product  is  less  than  in  similar  plants  paying 
lower  wages. 

REFERENCES 

1.  George,  Henry:    "Progress  and  Poverty." 

2.  :   "The  Land  Question." 

3.  FiLLEBRowN,     C.  B. :   "The  A  B  C  of  Taxation."    Boston,  1912. 
4. :    "A  Single  Tax  Hand  Book."    Boston,  1913. 

5.  Shearman,  Thomas  G.:    "National  Taxation." 

6.  "The  American  Economic  League,  Pubhcations  of."  Cincinnati.  (A 
league  to  promote  the  Single  Tax  idea.) 

7.  Hyder,  Joseph:  "The  Case  for  Land  Nationalization;  with  a  special 
introduction  by  Alfred  Russell  Wallace."    London,  1913. 

8.  Whittaker,  Sir  Thomas  P.:  "The  Ownership,  Tenure  and  Taxation 
of  Land.  Some  Facts,  Fallacies  and  Proposals  Relating  Thereto."  London, 
1914. 

9.  Miller,  Joseph  Dana:  "The  Single  Tax  Five- Year  Book."  New 
York,  1919. 

10.  Taussig,  F.  W.  (Editor) :  "State  Papers  and  Speeches  on  the  Tariff." 
Pubhshed  by  Harvard  University,  1892. 

11.  :   "Tariff  History  of  the  United  States."    6  edition.  New  York 

and  London,  1914. 

12.  :      "How  not  to  Revise  the   Tariff."     American  Economic 

Renew,  I,  pp.  20-37,  March,  1911. 

13.  Commons,  John  R. :  "Tariff  and  Protection  to  American  Labor." 
Annals  of  American  Academy  of  Pohtical  and  Social  Science,  September, 
1908,  pp.  51-56. 

14.  Bigelow,  Poultney:  "In  Darkest  Connecticut."  The  Independent, 
October  19,  1911. 

15.  Tarbell,  Ida  M.:    "The  Tariff  in  Our  Times."    New  York,  1911. 

16.  "Reciprocity  and  Commercial  Treaties."  United  States  Tariff  Com- 
mission, Washington,  1919. 


408  TAXATION  PROBLEMS 

17.  "Periodical.  The  Single  Tax  Review."  150  Nassau  St.,  New  York 
City,  $2.50  a  year. 

18.  Wright  C.  W.:  ''Wool  Growing  and  the  Tariff."  Harvard  Economic 
Studies,  Vol.  5,  1910. 

19.  Rhodes,  James  Ford:  "History  of  the  United  States."  Vol.  3,  27-60. 

20.  DoMERATZKY :   "European  Tariff  PoUcies  after  the  World  War." 

The  Americas,  Aug.,  Sept.,  Oct.,  Nov.,  1919. 

21.  "Single  Tax  in  Canada — for  Unimproved  Lands."  Grain  Growers' 
Guide,  January  7,  1920,  6. 

22.  Brown,  Harry  G.:  "International  Trade  and  Exchange,"  (especially 
chapters  4,  5,  6  of  Part  II),  New  York,  1914. 

APPENDIX 

Speech  of  Daniel  Webster. — (House  of  Representatives,  April  6,  1814.) 
"I  am  not  anxious  to  accelerate  the  approach  of  the  period  when  the  great- 
mass  of  American  labor  shall  not  find  its  employment  in  the  field;  when  the 
young  men  of  the  country  shall  be  obliged  to  shut  their  eyes  upon  external 
nature,  upon  the  heavens  and  the  earth,  and  immerse  themselves  in  close 
and  unwholesome  workshops,  when  they  shall  be  obliged  to  shut  their  ears 
to  the  bleatings  of  their  own  flocks,  upon  their  own  hills,  and  to  the  voices 
of  the  lark  that  cheers  them  at  the  plough,  that  they  may  open  them  in  dust, 
and  smoke,  and  steam,  to  the  perpetual  whirl  of  spools  and  spindles,  and  the 
grating  of  rasps  and  saws  .  .  . 

"It  is  the  true  policy  of  the  Government  to  suffer  the  different  pursuits 
of  society  to  take  their  own  course,  and  not  to  give  excessive  bounties  of  en- 
couragements to  one  over  another.  This,  also,  is  the  true  spirit  of  the  Consti- 
tution. It  has  not,  in  my  opinion  conferred  on  the  Government  the  power 
of  changing  the  occupations  of  the  people  of  different  states  and  sections,  and 
of  enforcing  them  into  other  employments." 

Question  by  Representative  Livingston. — (Testimony  of  Le  Grand  Powers, 
Chief  of  the  Division  of  Agriculture,  United  States  Census,  Washington, 
May  4,  1899,  before  the  Industrial  Commission.)  If  the  farmers'  products 
meet  the  competition  of  the  world  in  foreign  markets,  and  the  manufacturers' 
products  meet  the  same  competition  in  foreign  markets  of  the  world,  if  the 
Government  undertakes  to  help  one  in  any  way  ought  it  not  to  help  the  other, 
both  being  situated  in  certain  cases  aUke? 

Answer. — Certainly. 

Question. — Has  it  done  it? 

Answer. — I  do  not  know  why  it  has  not,  because  the  tariff  cuts  absolutely 
no  figure.  We  have  to-day,  to  catch  certain  of  the  voters,  a  nominal  tariff  on 
certain  agricultural  products  brought  here  from  other  countries.  That  tariff 
may  affect  prices  a  httle  on  the  border,  just  a  trifle,  but  in  the  markets  of  the 
United  States,  on  all  the  farms  of  the  United  States,  the  prices  are  not  affected 
a  hair's  breadth. 

Question  (Bounty  on  Exports). — You  do  not  think  that  would  remedy  it? 

Answer. — ^No;  you  would  have  out  of  such  a  bounty  no  benefit  at  all  to 
the  farmer.  It  would  be  the  same  as  in  Germany  in  the  matter  of  the  sugar 
bounty.  The  English  farmer,  as  the  result  of  the  German  bounty,  is  able  to 
feed  his  hogs  raw  German  sugar  as  one  of  the  cheapest  articles  he  can  give 
them;  and  he  does  that  at  the  expense  of  the  German  taxpayer.  The  system 
of  bounties  in  Germany  has  simply  raised  the  price  of  sugar  to  the  consumers 
in  Germany,  and  thus  lessens  the  amount  that  is  consumed  in  Germany.  If 
Germany  would  take  away  all  bounties  on  sugar  the  common  people  could 
and  would  consume  more  sugar,  and  they  would  thus  make  a  market  for  as 
much  sugar  of  their  own  in  twenty  years  as  they  have  built  up  by  their  export 
duties. — Industrial  Commission  Report.    Vol.  X,  pp.  176,  177. 


CHAPTER  XXV 

FOREIGN  COMPETITION 

The  question  of  foreign  competition  in  agriculture  is  one  which 
looms  on  the  immediate  horizon  of  the  future.  Then  somewhat 
more  remote  than  this  question,  but  none  the  less  real,  is  that 
fundamental  question  of  soil  exhaustion  and  the  future  food  supply. 
The  first  of  these  questions,  foreign  competition,  mil  be  briefly 
considered  in  this  chapter. 

A  Leaf  from  England's  Notebook. — ^We  can  view  with  great 
equanimity  economic  revolutions  in  other  countries.  Our  detach- 
ment and  perspective  enable  us  to  see  and  interpret,  in  a  disinter- 
ested fashion,  important  transitions  in  agriculture  which  are  forced 
on  our  neighbors.  But  may  not  the  same  revolutions  and  transi- 
tions happen  to  us?  Since  the  logical  outcome  of  foreign  competi- 
tion is  change  in  our  own  agriculture,  in  certain  particulars,  it  is 
extremely  interesting  and  suggestive  to  observe  the  experience  of 
England  when  foreign  competition  forced  her  to  pass  through  a 
period  of  agricultural  revolution  during  the  twenty-five  years 
following  our  own  Civil  War. 

The  opening  up  of  the  new  lands  of  the  United  States,  Canada, 
Argentina,  Australia,  and  elsewhere  proved  a  disaster,  for  the 
moment,  to  the  English  growers  of  wheat  and  live  stock.  Changes 
were  made  which  may  correctly  be  termed  an  economic  revolution 
in  English  agriculture.  Wheat  was  produced  as  the  ''pioneer 
crop"  on  the  virgin  soils  of  the  new  countries  in  such  volume  and 
at  so  low  a  cost  of  production  that  the  English  farmer  simply 
could  not  compete.  Ocean  steamships  furnished  cheap  and  rapid 
transportation.  The  invention  of  cheap  refrigeration  opened  up 
the  British  markets  to  the  almost  limitless  supplies  of  beef  and 
mutton  from  distant  lands.  At  the  same  time  occurred  a  steady 
fall  in  the  price  of  wool,  owing  to  the  cheap  supplies  from  the 
British  colonies.  And  on  top  of  all  these  disturbances  came  a 
succession  of  unfavorable  seasons.  These  and  other  causes,  all 
working  together,  shook  the  very  foundations  of  British  agricul- 
ture.   The  old  order  was  changing;  a  new  order  was  coming  in. 

The  farmers  who  clung  to  the  old  order  were  ruined  by  the 

409 


410  FOREIGN  COMPETITION 

change.  The  farmers  who  saw  the  signs  of  the  time  and  took 
advantage  of  them  were  made  prosperous  by  the  transition.  The 
immediate  effect  of  cheap  bread  and  meat  from  abroad  was  to 
benefit  the  cities  and  the  laboring  classes  in  the  industries  in 
the  cities.  The  prosperity  of  the  working  classes  brought  a 
demand  from  them  for  foods  in  addition  to  bread  and  meats, 
particularly  articles  of  food  which  before  had  been  looked  on  as 
luxuries.  These  food  articles  included  milk,  cream,  butter,  vege- 
tables, fruit,  jams,  preserves,  poultry,  eggs,  etc.  Thus  the  pros- 
perity of  the  cities  was  in  part  passed  on  to  the  farmers.  Certain 
high-grade  meats  produced  in  England  and  Scotland  were  in  greater 
demand.  There  followed  as  a  natural  consequence  of  agricultural 
revolution  a  great  expansion  in  the  growing  of  pure-bred  live  stock, 
particularly  dairy  cattle.  There  came  also  a  growth  in  raising 
pure-bred  beef  cattle,  partly  to  supply  the  home  demand  for  prime 
beef,  and  partly  for  export  purposes  to  countries  like  Argentina, 
where  fancy  prices  were  paid  for  pure-bred  sires. 

British  farmers  of  the  more  progressive  type  recognized  the 
changes  in  the  world  about  them,  and  hastened  to  take  advantage 
of  them.  Among  the  successful  activities  of  the  progressive  farmers 
may  be  named  the  following:  sale  of  fresh  milk,  fruit  industry 
(including  dried  fruit,  jam,  preserved  fruits,  cider),  flowers,  bulbs, 
market  gardening  (including  broccoli,  cabbage,  celery,  peas,  rhu- 
barb), eggs  and  poultry.  Marketing  and  transportation  problems 
also  received  considerable  attention,  in  order  that  a  proper  and 
wide  distribution  of  these  crops  could  be  secured. 

The  non-progressive  farmers,  feeling  the  pinch  of  the  transition, 
filled  the  newspapers  with  letters  about  the  ''depression  in  agri- 
culture," and  wanted  the  government  to  ''do  something"  for  the 
farmer.  Many  of  them  asked  for  a  protective  tariff  against  this 
"foreign  competition."  In  short,  the  issue  was  the  old  familiar 
one  of  Self-help  versus  State-aid.  But  self-help  prevailed  as  the 
policy  to  be  pursued.  And  now  the  British  farmer  himself  is  glad 
to  buy  his  wheat  from  abroad,  pa3dng  for  it  with  crops  that  yield 
him  a  higher  net  return.  In  other  words,  he  can  get  a  bushel  of 
wheat  from  the  prairies  of  western  Canada  with  less  labor  than 
he  can  produce  a  bushel  of  wheat  on  his  British  soil.  Consequently 
wheat-growing  in  England  has  been  reduced  to  those  areas  having 
distinct  advantages  in  producing  this  cereal. 


OUR  FOREIGN  TRADE;    ITS  CHANGES  411 

Conditions  Facing  the  United  States. — In  the  production  of 
the  staple  ''bread-and-meat"  crops — wheat,  corn,  hogs,  beef  cattle 
— we  face  the  competition  of  the  newer  and  fast-developing  coun- 
tries of  all  the  world.  While  there  are  many  areas  of  this  kind  of 
much  significance,  yet  the  following  three  are  of  the  most  imme- 
diate and  outstanding  importance,  namely,  Canada,  Argentina, 
Russia.  These  bread-and-meat  products  compete  in  the  markets 
of  the  world.  Rapid  transportation  has  largely  neutralized  the 
effects  of  distance.  Prices  respond  according  to  these  world-wide 
conditions,  in  which  the  United  States  is  clearly  not  an  isolated 
unit,  but  an  integral  part.  The  following  diagram  illustrates  this 
truth  for  the  wheat  crop.  As  we  affect  prices  in  these  other 
regions,  so  must  they  affect  prices  in  our  country.  Hence  it  is 
easily  conceivable  that  in  the  course  of  agricultural  evolution  or 
revolution  we  may  at  no  distant  date  see  the  American  consumers 
eating  bread  and  meat  from  foreign  lands.  Would  this  be  a  good 
thing  or  a  bad  thing  for  the  country?  In  the  case  of  the  English 
transition,  the  farmer,  on  the  whole,  seems  to  be  better  off  after 
the  change  than  before  the  change.  The  economic  principle  of 
the  so-called  '^ comparative  costs"  should  govern  in  any  situation 
of  this  kind.  This  principle  may  be  illustrated  in  this  way.  If 
the  Canadian  fanner  can  raise  better  and  cheaper  wheat  than  the 
American  farmer,  while  the  American  farmer,  in  his  turn,  can 
raise  better  and  cheaper  corn  than  his  Canadian  cousin,  then  the 
American  farmer  had  better  buy  his  wheat  from  Canada — paying 
for  it  with  corn,  rather  than  keep  on  raising  wheat  for  himself. 
Each  produces  what  he  can  produce  best  and  cheapest.  And 
under  a  free  interchange  of  products,  each  gets  the  maximum 
return  at  the  least  cost.  This  illustrates  how  a  cheap  agricultural 
product,  imported  from  a  foreign  country,  may  not  injure  the 
American  farmer.  The  consumers  who  are  not  farmers — and  they 
constitute  two-thirds  of  our  population — are  of  course  interested  in 
any  som'ce  of  cheaper  food  supply  which  promises  to  be  permanent. 

Our  Foreign  Trade ;  Its  Changes ;  Its  Significance. — A  glance 
at  a  table  of  our  exports  and  imports  during  a  period  of  three 
decades  prior  to  the  World  War  shows  strikingly  the  change  in  our 
foreign  trade  in  agricultural  products.  We  are  ceasing  to  export 
foodstuffs.  We  are  beginning  to  import  foodstuffs.  The  tremend- 
ous increase  in  the  volume  of  our  exports  is  due  to  the  growth  of 


412 


FOREIGN  COMPETITION 


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OUR  COMPETITORS:  ARGENTINA 


413 


The  following  brief  table  tells 


manufactures  in  this  country, 
the  story: 

Exports  of  Foodstuffs  and  Manufactures  from  the  United  States,  and  Percentage 
Which  Each  Group  Forms  of  the  Total;  Changes  in  the  Thirty-four  Years 
Before  the  World  War. 


Foodstuffs 

Manufactures 

Fiscal  year 

Value 

Per  cent 

Value 

Per  cent 

1880 

$459,461,673 
325,127,668 
356,829,763 
318,176,639 
545,473,695 
401,249,778 
369,087,974 
385,418,436 
418,737,763 
502,111,639 
430,713,457 

55.77 
44.74 
42.21 
40.11 
39.80 
26.90 
21.59 
19.13 
19.29 
20.72 
18.49 

$121,818,298 

150,256,178 

178,982,042 

205,057,865 

484,846,275 

611,425,574 

766,981,245 

907,519,841 

1,020,417.687 

1,185,104,309 

1,102,132,210 

14.78 

1885 

20.67 

1890 

21.18 

1895 

25.84 

1900                        .              ... 

35.37 

1905 

40.98 

1910                        

44.85 

1911 

45.07 

1912                  

47.02 

1913 

48.80 

1914                

47.17 

The  products  of  the  factory  greatly  exceed  the  products  of 
the  farm  in  our  exports.  For  many  years  the  United  States 
enjoyed  the  world's  primacy  as  an  exporter  of  cotton,  breadstuffs, 
and  meats.  We  have  now  reached  the  point  where  imports  of 
packing  house  products  normally  exceed  our  exports.  Likewise 
the  imports  of  live  animals  exceed  the  exports  of  live  animals.  In 
breadstuffs  our  exports  of  flour  have  fallen  to  two-thirds  their 
former  level,  but  the  export  of  wheat  is  maintained  in  peace  times 
at  about  the  same  level,  namely,  about  100,000,000  bushels.  In 
cotton  we  still  have  about  two-thirds  of  the  world's  export  trade, 
namely,  about  8,000;000  bales. 

The  situation  may  be  summarized  as  follows: 

We  are  exporting  bread  and  meat,  but  less  than  formerly. 
We  are  importing  foodstuffs,  and  more  than  formerly. 
We  are  exporting  manufactured  goods,  more  and  more.     We 
have  become,  in  fact,  an  urban  people. 

So  much  for  our  status;  what  are  the  future  prospects  of  Russia, 
Canada,  and  Argentina?  Some  facts  are  submitted  as  to  their 
resources,  which  indicate  in  some  measure  their  future  promises. 

Our  Competitors:  Argentina. — As  a  typical  example  of  our 
increasing  competition  from  foreign  countries,  it  is  interesting  to 
note  the  situation  in  Argentina.  Few  Americans,  as  yet,  realize 
the  significance  of  Argentina's  actual  and  potential  competition. 
Argentina  has  the  same  climate  as  the  United  States,  occupying 
approximately  the  same  position  south  of  the  equator  as  that  of 


414 


FOREIGN  COMPETITION 


the  United  States  north  of  the  equator.  Its  area  is  two-fifths  that 
of  the  United  States,  but  its  population  (eight  and  one-half  million) 
is  only  one-twelfth  that  of  the  United  States.  Less  than  one-fourth 
of  its  productive  land  is  under  cultivation.     Hence  we  see  the 


Fig.  81. — Ocean  transportation,  port  of  Buenos  Aires. 


Fk;.   .S2. — Modern  Ki:iin  c'lcvatorb  at  Bu 


room  for  expansion  both  in  population  and  production.  In  1891 
Argentina  exported  only  17,500,000  bushels  of  grain;  in  1913  the 
exports  amounted  to  397,000,000  bushels,  an  increase  of  over  two 
thousand  per  cent.  The  average  yield  per  acre  of  corn  in  Argentina 
for  the  three  years  1911,  1912,  1913  was  27,^  bushels,  against 


OUR  COMPETITORS :  ARGENTINA 


415 


27  bushels  in  the  United  States.  The  percentage  of  the  wheat 
crop  of  the  United  States  exported  was  17.5  per  cent,  while  Argen- 
tina exported  60.6  per  cent.  Of  the  oats  produced  in  the  United 
States,  only  1.1  per  cent  was  available  for  export,  while  Argentina 
had  an  average  surplus  of  82.4  per  cent  of  the  crop.    In  the  pro- 


FiG.  83. — Mill  of  Minnetic  y  Cia,  of  Cordoba,  located  at  Rosario. 


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Fig.  84. — Alfalfa  grows  luxuriantly  in  Argentina. 

duction  of  flaxseed  Argentina  exceeds  the  United  States  by  over 
10,000,000  bushels,  although  an  average  of  only  •  four  one- 
hundredths  of  1  per  cent  is  exported  from  the  United  States,  while 
81.8  per  cent  of  the  Argentina  crop  is  available  for  export.  The 
average  yields  per  acre  of  flaxseed  are  the  same  in  both  countries, 
namely,  lYi  bushels  (Figs.  81  to  87).  - 

The  meat  industry  of  Argentina  shows  greater  strength  even 


416  FOREIGN  COMPETITION 

than  the  grain  industry.  ''The  growth  of  the  meat  trade  in  the 
Argentine  RepubUc,"  says  the  United  States  Department  of  Agri- 
culture, ''has  been  Httle  short  of  remarkable  and  its  importance 
in  the  world's  commerce  is  greatest  in  beef  products."    Argentina's 


Fig.  85. — A  modern  method  of  shelling  corn  in  Argentina. 


mmm 
Fig.  86. — Magnificent  herd  of  cattle  in  the  Tampa  Central,  Argentina. 

exports  of  frozen  beef  began  in  1884;  of  chilled  beef  in  1901.  The 
chilled  beef  trade  has  shown  a  rapid  growth,  reaching  2,989,805 
quarters  in  1913.  This  amount  considerably  exceeds  the 
351,748,333  pounds  of  fresh  beef  exported  by  the  United  States 
in  1901,  the  year  the  Argentina  chilled  beef  trade  began  and 
which  year  marked  the  beginning  of  the  decline  in  the  United 
States  of  exports  of  fresh  beef. 


OUR  COMPETITORS:  ARGENTINA 


417 


418 


FOREIGN  COMPETITION 


The  following  table  shows  in  detail  the  growth  of  Argentina's 
beef  trade. 

Exports  of  Beef  from  Argentina 


Year 

Frozen  beef 

Chilled  beef 

1901 

Quarters 

479,372 

735,715 

877,342 

1,018,072 

1,533,745 

1,580,589 

1,403,835 

1,579,163 

1,615,888 

1.434,078 

1,693,494 

2,086,780 

1,102,938 

Qiuirters 

24,919 

94,498 

142,542 

198,300 

426,002 

455,459 

849,613 

789,348 

1,071,474 

1,608,608 

2,131,791 

2,269,474 

1902. 

1903 

1904 

1905 

1906 

1907 

1908 

1909 

1910 

1911 

1912 

1913 

2,989,805 

In  contrast  with  this  table,  the  following  table  shows  the  steady 
decline  in  United  States  beef  exports. 

Exports  of  Fresh  Beef  from  the  United  States 


Year 

Quantity, 
pounds 

Year 

Quantity, 
pounds 

1901             

351,748,333 
301,824,473 
254,795.963 
299,579,671 
236,486.568 
268,054,227 
281,651.502 

1908, . 

201,154,105 

1902 

1909 

122,952.671 

1903 

1910                           

75,729.666 

1904 

1911 

42.510.731 

1905         

1912             

15,264,320 

1906 

1913 

7,362,388 

1907     

1914 

6,394,404 

Argentine  chilled  beef  normally  sells  on  the  English  market 
within  IJ/^  to  2  cents  a  pound  of  the  price  of  English  beef,  and 
Argentine  frozen  beef  from  1^  to  23^  cents  a  pound  lower  than 
Argentine  chilled.  The  destination  of  nearly  all  of  Argentina's 
beef  is  England,  although  the  United  States  is  beginning  to  import 
Argentine  meat.  In  the  twelve  months  prior  to  the  World  War 
the  United  States  imported  153,882,670  pounds  of  meat  from 
Argentina.  Cattle  growing  in  Argentine  has  proved  to  be  a  much 
more  certain  enterprise  than  grain  growing,  hence  the  apparent 
tendency  to  convert  grain  lands  into  alfalfa  pastures.  Cattle 
breeding  methods  in  Argentina  are  on  a  high  plane,  surpassing 
those  of  the  United  States.  In  the  United  States  it  is  the  exception 
to  find  a  splendid  herd  of  beef  cattle  handed  down  from  father  to 
son,  but  in  Argentina  it  is  so  common  as  to  be  almost  the  rule.  In 
fact,  many  establishments  have  been  in  the  hands  of  the  same 
family  for  nearly  a  century.  Furthermore,  the  custom  is  universal 
of  bujdng  the  best  individual  cattle  and  the  best  blood  regardless 


I 


UNITED  STATES  AND  CANADA 


419 


of  price.  An  Argentine  breeder  in  1913  paid  $34,400  for  a  Short- 
horn bull,  the  highest  price  up  to  that  time  ever  paid  for  a  bull  of 
any  breed.  Although  the  Argentine  herds  have  been  brought  to  a 
high  standard,  their  owners  are  constantly  in  the  market  for 
breeding  animals  to  bring  in  fresh  blood  or  to  improve  the  quality 
of  the  herds.  This  trade  has  heretofore  gone  almost  entirely  to 
Great  Britain,  and  it  has  been  one  of  the  most  profitable  outlets 
which  British  breeders  have  had.  The  Commerce  Reports  of 
May  15,  1916,  contains  this  significant  statement;  ''The  importa- 
tion of  fine  cattle  and  sheep  from  England  into  Argentina  is  con- 
tinuing in  spite  of  the  war.  A  shipment  of  shorthorn  cattle  from 
Liverpool  for  Buenos  Aires  is  announced  in  La  Razon  for  April  14, 
and  another  shipment  is  expected  in  May."  The  business  and 
social  relations  between  British  and  Argentine  breeders  are  close. 
British  judges  nearly  always  officiate  at  the  leading  Argentine 
shows,  and  there  is  no  recollection  thus  far  of  a  single  in- 
stance of  a  North  American  breeder  having  been  asked  to  judge 
at  an  Argentine  show.  Some  authorities  look  for  a  positive 
and  beneficial  effect  on  the  United  States  beef  cattle  industry 
in  Argentina's  probable  demand  for  breeding  animals  from  the 
United  States. 

.  United  States  and  Canada. — The  total  area  of  Canada  is  one 
and  one-fourth  times  as  large  as  the  United  States,  but  the  popu- 
lation (1911  census,  7,206,643)  is  only  one-thirteenth  as  large.  As 
an  exporter  of  wheat,  oats,  and  flaxseed  Canada  has  now  become 
one  of  the  strongest  countries  in  the  world.  Omitting  the  Yukon 
and  the  Northwest  territories,  the  nine  organized  provinces  of 
Canada  contain  a  total  land  area  of  977,585,513  acres,  of  which 
109,948,988  acres,  or  11.25  per  cent,  is  now  occupied  as  farm  land. 
The  estimate  of  possible  farm  land  in  these  nine  provinces  is 
358,162,190  acres,  or  36  per  cent  of  the  total  area.  In  other 
words,  less  than  one-third  the  available  land  in  these  provinces 
is  under  cultivation. 

The  following  table  shows  Canada's  producing  power  in  the 
years  1914  and  1915. 


Yield  and  Value  of  Field  Crops  in  Canada,  1914,  1915: 

Pre-War  Basis. 

Wheat 

Oats 

Barjey 

1915  yield 

376,303,000.00  bu. 
161,280,000.00  bu. 

28.98  bu. 

15.67  bu. 
$312,569,400.00 

520,103,000.00  bu. 
313,078,000.00  bu. 

45.76  bu. 

31.12  bu. 
$176,894,700.00 

o3,331  300  00  bu 

1914  yield 

36,201,000.00  bu 

1915  yield  per  acre 

1914  yield  per  acre 

1915  value  of  crop 

.35.33  bu. 
24.21  bu. 
.$26,704,700.00 

420 


FOREIGN  COMPETITION 


Yield  and  Value  of  Field  Crops  in  Canada,  1914, 1915.   Pre-War  Basis — Cont'd 


1915  yield 

1914  yield 

1915  yield  per  acre. 

1914  yield  per  acre. 

1915  value  of  crop. . 


Flaxseed 


10,628,000.00  bu. 

7,175,200.00  bu. 

13.18  bu. 

6.62  bu. 

$15,965,000.00 


Corn 


14,368,000.00  bu. 

13,924,000.00  bu. 

56.72  bu. 

54.39  bu. 

$10,243,000.00 


Russia. — Russia  is  generally  referred  to  as  the  ''Great  Un- 
known" in  the  grain  trade.    A  vast  country,  sparsely  settled,  a 


Fig.  88. — Direct  marketing  scene  at  a  Russian  fair. 

fertile  soil,  and  primitive  conditions  in  soil  cultivation  and  crop 
marketing,  her  real  and  potential  crop  surplus  for  export  is  a 
disturbing  factor  in  the  world's  markets.  Only  one-third  of  Euro- 
pean Russia's  productive  land  is  under  cultivation  as  yet!  And 
it  is  very  poorly  tilled !  And  only  one-twentieth  of  Asiatic  Russia's 
productive  land  is  now  under  cultivation.  It  is  impossible  to 
forecast  the  possibilities  of  increase  in  agricultural  production  for 
such  a  country  as  this  (Figs.  88  and  89).  Education,  scientific 
agriculture,  modern  storage  and  transportation  facilities,  stabilized 


RUSSIA 


421 


government,  all  these  influences  must  contribute  to  increasing  very 
greatly  Russia's  annual  crop  yields. 

The  thoughtful  student  who  aspires  to  be  a  real  agricultural 
statesman  must  consider  world  conditions  in  agriculture.  Three 
of  our  chief  competitors  in  the  world's  agricultural  commerce  have 
been  named.  Our  real  and  potential  competitors  are  many,  and 
can  best  be  shown  by  means  of  a  brief  statistical  table,  showing 


Fig.  89. — Transportation  in  Russia. 

for  each  such  country  its  total  area,  its  productive  land,  and  the 

present  ai  ea  of  its  cultivated  land.    Such  a  table  is  presented  below : 

Total  Area  and  Agricultural  Land  in  Various  Countries. 


Total  area 
acres 

Productive  land 

Cultivated  land 

Country 

Amount 
acres 

Per 

cent 

of 
total 

Amount 
acres 

Per 
cent 

of 
total 

United  States 

1,903,269,000 

2,306,502,153 

729,575,000 

74,132,000 

80,272,000 

130,8.54,000 

133,594,000 

1,278,203,000 

56,802,000 

20,350,000 

615,695,000 
4,028,001,000 

1,903.664,000 
66,469,000 

878,789,000 
109,948,988 
537,805,000 

69,939,000 

77,225,000 

123,642,000 

126,401,000 

698,202,000 

47,737,000 

18,789,000 

465,706,000 
715,838,000 

119,942,000 
57,310,000 

46.2 

4.8 
73,7 

94,3 
96.2 
94.5 
94.6 
54.7 
84.0 
92.3 

75.6 
17.8 

6.3 
86.2 

293,794,000 
35,261,338 
44,446,000 

26,272,000 
35,178,000 
59,124,000 
63,689,000 
245,755,000 
14,587,000 
3,275,000 

264,868.000 
33,860,000 

14,987,000 
6,955,000 

15.4 

Canada. . 

1  6 

Argentina 

Europe 
Austria 

6.1 
35  4 

Hungary.  . 

43  8 

45  2 

Germany 

47  7 

19  2 

Great  Britain 

25  7 

Ireland 

16  1 

Asia 

43  0 

's 

Oceania 
Australia 

g 

10  5 

Total  for  36  countries.  . 

15,071,209,000 

4,591,691.000 

30.5 

1,313,832,000 

8.7 

Note. — By  comparing  the  productive  land  (30.5)  with  the  cultivated  land  (8.7)  we 
find  that  but  28.5  per  cent  of  the  usable  land  is  now  cultivated. 


422  FOREIGN  COMPETITION 

QUESTIONS  ON  THE  TEXT 

1.  Describe  in  full  the  transition  in  English  agriculture  in  the  period  follow- 

ing 1870.     Same  for  Denmark  (p.  423). 

2.  What  suggestions,  if  any,  for  the  United  States,  in  the  problems  presented 

and  methods  used  in  this  period  in  England  ? 

3.  Show  what  competitive  conditions  now  face  the  United  States. 

4.  Explain  the  principle  of  "comparative  costs." 

5.  Show  the  changes  in  our  foreign  trade  since  1880,  and  state  their  significance. 

6.  Discuss  Argentina  as  a  competitor:   area;  climate;  population;  crops;  Hve 

stock;  exports. 

7.  In  a  similar  way  discuss  Canada. 

8.  In  a  similar  way  discuss  Russia. 

9.  The  productive  land  of  the  world  is  what  per  cent  of  the  total  land  acreage? 

The  cultivated  land  constitutes  what  per  cent  of  the  productive  land? 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Prepare  a  chart  or  graph  showing  the  world's  cotton  production,  also 

cotton  production  of  United  States,  Egypt,  and  India. 

2.  Prepare  a  table  showing  wheat  acreage  and  yields  for  a  series  of  years  in 

the  United  States,  Argentina,  Canada,  Russia,  Australia,  India,  the 
Balkan  States,  France. 

3.  What  should  be  the  policy  of  our  government  in  using  a  protective  tariff 

on  imports  of  foreign  agricultural  products,  such  as  corn  from  Argen- 
tina, hay  from  Canada,  beans  from  Manchuria,  citrus  fruit  from  Spain 
and  Italy,  etc.? 

4.  Debate.    Resolved,  that  each  country  should  devote  itself  to  the  produc- 

tion of  those  commodities  in  which  it  has  special  advantages,  and  there 
should  be  free  interchange  of  all  products. 

REFERENCES 

1.  Finch,  V.  C,  and  Baker,  O.  E.:  "Geography  of  the  World's  Agri- 
culture, United  States  Department  of  Agriculture."  Contribution  from  the 
Office  of  Farm  Management,  Washington,  1917. 

2.  RuBiNOW,  I.  M.:  "Russian  Wheat  and  Wheat  Flour  in  European 
Markets."  Bulletin  66,  Bureau  of  Statistics,  United  States  Department  of 
Agriculture,  Washington,  June,  1908. 

3.  Davis,  Mack  H.:  "Flour  and  Wheat  Trade  in  European  Countries 
and  the  Levant."  Bureau  of  Manufactures,  Department  of  Commerce  and 
Labor,  Washington,  1909. 

4.  "Imports  and  Exports  of  Agricultural  Products."  Published  annually 
in  Yearbook  of  Agriculture,  Washington. 

5.  McKenna,  Royal  T.:  "Annual  and  Average  Production  of  and 
International  Trade  in  Important  Agricultural  Products  by  Countries." 
Circular  31,  Bureau  of  Statistics,  United  States  Department  of  Agriculture, 
Washington,  July,  1912. 

6.  "United  States  Industrial  Commission  Report,"  19  vols.,  Washington, 
1898-1902,  Vol.  10,  p.  cccxxxix,  p.  176;  Vol.  19,  pp.  187-193. 

7.  Pratt,  E.  A.:    "The  Transition  in  Agriculture."    London,  1909. 

8.  Yearbook  Department  of  Agriculture :  1903 — Holmes,  Geo.  K. :  "The 
Nation's  Farm  Surplus."  1913 — Melvin,  A.  D.:  "The  South  American  Meat 
Industry."  1914 — Melvin,  A  .D.,  Rommel,  Geo.  M.:  "New  Production  in 
the  Argentina  and  its  Effects  upon  the  Industry  in  the  United  States."  381-391. 
1914 — Joss,  E.  C:  "Meat  Production  in  Australia  and  New  Zealand,"  421- 
439.  1915--DuvAL,  Laurel:  "Production  and  Handling  of  Grain  in  Argen- 
tina."   281-299. 

9.  "Industrial  Commission  Report."    Vol.  10,  cccxxxix-cccliv. 

10.  Day,  Clive:   "History  of  Commerce"  (New  edition),  1914. 


APPENDIX 


423 


11.  Evans,  C.  H.:  "Domestic  Exports  from  United  States  to  all  Coun- 
tries," 1789-1882,  1884. 

12.  Johnson,  E.  R.:  "History  of  Domestic  and  Foreign  Commerce  of 
the  United  States,"  1915. 

13.  "Report  of  the  Empire  Cotton  Growing  Committee,"  London,  1920. 

14.  Smith,  Rollin  E.:  "Argentina  and  the  Grain  Trade,  Price  Current 
Grain  Reporter,"  Chicago,  May  7,  1919. 

15.  PicKELL,  J.  Ralph:    "Agricultural  Argentina,"  Chicago,  n.d. 

16.  "American  Dairy  Competition — Argentina  and  Canada — a  Serious 
Question."  The  Market  Reporter  (U.  S.  Bureau  of  Markets),  Vol.  1,  No.  7, 
Feb.  14,  1920,  p.  1. 

APPENDIX 

Foreign  Trade  of  the  United  States  in  Agricultural  Products,  1852-1918.  {Com- 
piled from  Re-ports  of  Foreign  Commerce  and  Navigation  of  the  United  States. 
All  Values  are  Gold.) 


Agricultural  exports  ^ 

Agricultural  it 

Year  ending  June  30 

Domestic 

Total 

Percentage 

of  all 

exports 

Total 

Percentage 

of  all 

imports 

Average : 

1852-1856 

$164,895,146 
215,708,845 
148,865,540 
250,713,058 
396,666,397 
591,350,518 

557,472,922 
573,286,616 
638,748,318 
827,566,147 
879,541,247 
975,398,554 

951,628,331 
857,113,533 
878,480,557 
859,160,264 
826,904,777 

976,047,104 

1,054,405,416 

1.017,396,404 

903,238,122 

871,158,425 

1,030,794,402 
1,050,627,131 
1,123,651,985 
1,113,973,635 
1,475,937,607 
1,518,071,450 
1,968,253,288 
2,281,338,876 

80.9 
81.1 
75.7 
76.9 

78.5 
80.4 

76.3 
74.7 
73.0 
65.9 
59.5 
53.9 

65.2 
63.2 
63.1 
59.5 
55.4 

56.8 
56.9 
55.5 
55.1 
50.9 

51.2 
48.4 
46.3 
47.8 
54.3 
35.5 
31.6 
39.0 

$77,847,158 
121,018,143 
122,221,547 
179,774,000 
263,155,573 
266,383,702 

311,707,564 
366,950,109 
398,332,043 
376,549,697 
487,881,038 
634,570,734 

391,931,051 
413,744,557 
456,199,325 
461,434,851 
553,851,214 

554,175,242 
626,836,808 
539,690,121 
638,612,692 
687,509,115 

680,204,932 

783,457,471 

815,300,510 

924,247,116 

910,786,289 

1,189,704,830 

1,404.972,108 

1,614,219,764 

29.1 

1857-1861.  .  . 

38.2 

1862-1866  

43.0 

1867-1871 

42.3 

1872-1876 

46.5 

1877-1881 

50.4 

1882-1886 

46.8 

1887-1891 

43.3 

1892-1896             

51.6 

1897-1901 

50.2 

1902-1906 

46.3 

1907-1911 

45.2 

1901 

47  6 

1902 

45.8 

1903 

44.5 

1904 

46.6 

1905 

49.6 

1906 

45.2 

1907 

43.7 

1908 

45.2 

1909 

48.7 

1910     

44  2 

1911 

44.5 

1912 

47.4 

1913 

45.0 

1914     

48  8 

1915 

54.4 

1916 

54.1 

1917 

52.8 

1918  (preliminary) 

54.8 

1  Not  including  forest  products. 

The  Transition  in  Agriculture  in  Denmark. — How  it  was  Met. — (Without 
the  use  of  a  protective  tariff.)  The  following  extract  is  from  a  pamphlet, 
"A  Short  Outline  of  Danish  Agriculture  through  the  Last  Generation,"  pre- 
sented to  British  journalists  on  their  visit  to  Denmark  in  August  1919,  by  the 
Union  of  Danish  Agriculture.    Copenhagen,  1919. 


424  FOREIGN  COMPETITION 

"The  time  from  about  1880  until  the  outbreak  of  war  in  1914  has  for  Danish  agriculture 
been  a  period  of  extraordinary  and  prosperous  development. 

"Before  1880  Danish  agriculture  was  mainly  producer  and  seller  of  corn;  but  when 
America's  surplus  production  of  corn  in  the  eighties  reached  Europe  the  corn  prices  fell 
rapidly  and  the  corn  producing  agriculture  had  to  work  under  very  difficult  conditions, 
particularly  in  Denmark  where  the  chief  part  of  the  soil,  especially  in  Jutland  but  also  in 

Farts  of  the  islands,  is  of  so  poor  a  quality  that  it  only  yields  comparatively  small  crops, 
nstead  of  entering  into  a — from  the  outset  hopeless — competition  against  the  transatlantic 
import  of  corn  a  happy  fate  led  Danish  agriculture  in  the  quite  opposite  direction,  and  taking 
advantage  first  of  the  supplies  of  cheap  corn  and  later  of  oil  cakes  as  raw  material  a  produc- 
tion of  refined  produces  (products)  of  domestic  animals  was  taken  up — 'especially  butter 
and  bacon — which  gradually  became  the  specialty  of  Danish  agriculture.  This  production 
spelt  a  thorough  revolution  of  Danish  agricultural  economy  and  opened  possibilities  as 
well  for  rural  enterprises  to  which  the  soil  was  better  adapted  than  to  corn  growing  as  for 
the  extensive  outparceling  of  land  to  the  small  freeholds  that  have  become  a  social  blessing 
to  the  whole  country  .  .  . 

"  When  the  farmers  after  1880  at  a  continually  increasing  rate  took  up  the  production 
of  butter,  bacon,  and  eggs,  as  the  chief  articles  of  export,  this  production  was  from  the  very 
start  adjusted  so  as  to  suit  British  consumers;  and  the  English  market  was  held  mainly  in 
view  from  the  very  beginning  also  at  the  numerous  new-established  cooperative  factories. 
Every  effort  was  made  to  produce  the  particular  quality  of  butter  and  bacon  required  by  the 
great  English  army  of  consumers,  and  simultaneously  every  endeavor  was  made  to  ensure 
a  fixed  quality  common  for  the  whole  country  all  the  year  round  and  to  ensure  equal  ship- 
ments both  summer  and  winter.  The  efforts  were  duly  appreciated  in  England,  and  the 
Danish  agricultural  products  gained  in  the  course  of  time  a  firm  and  secure  footing  on  the 
British  Market." 


CHAPTER  XXVI 

FOOD  SUPPLY  PROBLEM 

During  the  past  two  hundred  years  the  United  States  has 
supphed  foreign  countries  so  lavishly  with  foodstuffs  that  the 
problem  of  a  future  food  supply  at  home  was  scarcely  thought  of. 
But  now  that  the  tide  is  turning,  now  that  we  are  importing  some 
corn  and  some  meat,  it  is  an  opportune  time  to  pause  and  take  an 
inventory  of  conditions  as  they  are,  and  to  endeavor  to  form  an 
estimate  of  conditions  as  they  soon  will  be. 

Food  Problem. — The  food  supply  problem  is  a  dual  problem — 
(1)  How  much  food  is  produced?  (Fig.  90.)  (2)  How  many  people 
are  there  to  eat  this  food?  We  know  that  population  is  increasing. 
We  know  that  the  food  supply  is  increasing  also.  But  the  present 
and  the  prospective  ratio  between  the  increase  in  population  and 
the  increase  in  food  supply  is  the  vital  question  that  concerns  us. 
Some  of  the  most  important  literature  of  the  world  has  been 
devoted  to  a  discussion  of  one  or  more  aspects  of  this  problem. 
T.  R.  Malthus,  the  British  clergyman,  Liebig,  the  German  agri- 
cultural chemist,  and  Sir  Wm.  Crookes,  the  British  scientist,  to 
name  but  three  great  thinkers,  have  all  made  notable  contributions 
to  the  world's  knowledge  of  this  problem.  The  most  widely 
known  of  these  three  is  doubtless  Malthus.  Since  he  treats  of  the 
problem  from  the  population  standpoint,  his  doctrine  will  first 
receive  attention. 

The  Malthusian  Theory  of  Population. — Like  a  good  many 
Englishmen  of  the  ''upper  classes"  of  that  day,  Malthus  was  inter- 
ested in  '^  Plans  of  improving  the  poor."  By  battling  with  his  critics 
for  some  27  years  (from  1798  to  1825)  he  finally  worked  out  his 
conclusions  that  the  trouble  with  the  poor  was  their  poverty; 
that  their  poverty  was  due  to  low  wages;  that  low  wages  were  due 
to  the  oversupply  of  labor,  namely,  to  the  oversupply  of  poor 
people,  and  that  consequently  the  one  effective  remedy  was  to 
produce  fewer  laborers.  This  limitation  of  the  supply  of  labor 
would  raise  wages,  leave  more  food  for  each  laborer,  and  not 
greatly  inconvenience  the  "upper  classes."  "We  must  show  the 
poor,"  said  Malthus,  "that  the  withholding  of  the  supplies  of 
labor  is  the  only  possible  way  of  really  raising  its  price,  and  that 
they  themselves  being  the  possessors  of  this  commodity  have  alone 

425 


426 


FOOD  SUPPLY  PROBLEM 


power  to  do  this."  The  proposed  systems  of  "equaUty"  of  his 
day  Malthus  rejected  as  mere  palterings  with  a  serious  problem. 
The  general  effect  of  years  of  cheapness  and  abundance  of  food, 
says  Malthus,  is  to  dispose  a  great  many  persons  to  marry.  Coun- 
tries are  populous  according  to  the  quantity  of  human  food  which 


Fig.  90. — Fresh  and  cured  meats  in  a  cold  storage  warehouse  in  Chicago. 


they  produce  or  can  acquire;  and  happy  according  to  the  liberality 
with  which  food  is  divided,  the  quantity  which  a  day's  labor  will 
produce.  Corn  countries  are  more  populous  than  pasture  countries, 
and  rice  countries  more  populous  than  corn  countries.  This 
happiness  depends  on  the  proportion  which  the  population  and 
the  food  bear  to  each  other. 

But  population,  says  Malthus,  tends  to  increase  beyond  the 
means  of  subsistence.    Population  is  limited  by  the  food  supply. 


THE  MALTHtJSIAN  THEORY  OF  POPULATION  427 

Population  when  unchecked  goes  on  doubhng  itself  every  twenty- 
five  years — that  is,  it  increases  in  a  geometrical  ratio.  The  food 
supply,  under  circumstances  the  most  favorable  to  human  industry 
could  not  possibly  be  made  to  increase,  says  Malthus,  faster  than 
in  an  arithmetical  ratio.  That  is,  population  increases  as  the 
numbers  1,  2,  4,  8,  16,  and  so  on,  while  the  food  supply  increases 
as  the  numbers  1,  2,  3,  4,  5.  Thus  at  the  end  of  100  years  the 
population  would  tend  to  be  more  than  3  times  the  food  supply. 
The  Malthusian  theory  of  population  consists  of  two  parts — the 
first  part,  just  stated,  of  the  geometric  increases  of  population 
when  unchecked;  the  second  part,  of  the  ''checks  on  population." 
The  ultimate  check  is  want  of  food.  But  the  immediate  checks  are 
two,  namely,  (1)  preventive — that  is,  voluntary  restraint;  (2)  posi- 
tive— that  is,  vice  and  misery  in  every  form  which  causes  a  short- 
ening of  human  life.  Vice  and  misery  include  unwholesome  labor, 
exposure,  poverty,  disease,  war,  plague,  famine.  Delay  of  mar- 
riage, from  prudential  considerations,  said  Malthus,  is  the  most 
powerful  check  in  modern  Europe  in  keeping  down  the  population 
to  the  level  of  subsistence.  A  lower  birth-rate  would  lead  to  a 
lower  death-rate,  said  Malthus,  that  is,  to  fewer  and  better  chil- 
dren. The  apparent  paradox  that  better  wages  would  lead  to 
earlier  marriage  and  more  children  and  lower  wages,  Malthus  met 
by  laying  stress  on  a  more  general  system  of  education  and  a  higher 
standard  of  living  for  the  workers. 

He  stated  that  the  population  of  the  United  States  had  doubled 
every  25  years  during  the  first  150  years,  and  he  estimated  a  similar 
rate  of  increase  for  the  future  as  long  as  abundance  of  cheap  food 
lasted.    This  table  compares  his  prediction  with  the  facts. 

Population  of  the  United  States. 


Year 

The  Malthus 

estimate  in  1798 

population 

The  U.  S. 
census  reports 

1790 

3,929,214 

7,858,428 

15,716,856 

31.433,712 

62.867,424 

3.929,214 

1815 

1840 

17,069,453 

1865 

1890 

62,622,250 

The  actual  population  of  the  United  States  in  1890,  by  the 
federal  census,  was  62,622,250,  or  less  than  one-half  of  one  per 
cent  under  the  estimate  made  by  Malthus  some  ninetj^  years  before. 
Following  the  year  1890,  however,  for  the  first  time  the  ''geo- 
metrical increase"  failed  to  occur.    On  the  basis  of  doubUng  every 


428  FOOD  SUPPLY  PROBLEM 

25  years,  the  population  would  have  reached  125,734,848  in  1915. 
The  actual  population  in  1915  was  about  100,000,000.  Evidently 
the  Malthusian  ''check"  on  population  had  begun  to  operate. 

The  Malthusian  theory  of  population  is  undoubtedly  correct. 
The  grimmer  aspects  of  his  theory  are  not  so  conspicuous  to-day, 
since  famine,  pestilence,  war,  vice  and  misery  do  not  take  such 
heavy  tolls  as  they  once  did  in  overpopulated  countries.  The 
prudential  checks,  the  "higher  standards  of  living,"  are  lowering 
the  birth-rate  in  many  countries.  The  unknown  factors  now  in 
the  problem  of  ascertaining  the  present  and  prospective  ratio  of 
population  to  food  supply  include  the  following:  declining  birth- 
rate; knowledge  of  birth  control;  declining  death-rate;  new  knowl- 
edge concerning  human  and  animal  nutrition;  possibilities  of 
scientific  agriculture.  But  somewhere  in  the  background  is  the 
ultimate  limit  of  population — the  food  supply.  It  would  doubtless 
be  a  very  simple  biological  feat  to  double  the  population  of  China 
or  Japan  in  25  years,  but,  as  Malthus  says,  it  is  doubtful  if  the 
food  produce  of  China  and  Japan  could  be  doubled  in  any 
number  of  years. 

Soil  Ejdiaustion  Question. — The  last  paragraph  referred  to 
China  and  Japan — the  oldest  agricultural  districts  in  the  world. 
The  records  show  that  agriculture  has  been  conducted  in  the  same 
fields  here  for  at  least  four  thousand  years.  The  fact  that  this 
soil  is  not  yet  exhausted  has  given  a  sense  of  false  security  to  those 
who  live  nearer  the  virgin  soils  of  a  new  country.  These  countries 
serve  as  a  warning,  if  anything,  of  the  dire  calamity  of  soil  exhaus- 
tion. In  Professor  F.  H.  King's  very  excellent  book  on  ''Farmers 
of  Forty  Centuries"  ^  he  shows  that  the  farmers  of  Japan  and 
China  maintain  their  soil  fertility  only  by  applying  to  the  soil 
animal  and  vegetable  waste  matter  of  every  possible  kind.  Not 
only  are  canal  bottoms  dredged  for  the  fertile  canal  mud,  but  the 
straw  from  the  grain,  the  leaves  from  the  trees  are  all  used  in 
making  a  compost  to  be  applied  to  the  tiny  fields.  The  urine  of 
animals  is  saved,  yes,  even  every  bit  of  the  human  excrement 
itself.  For  this  reason  the  great  cities  do  not  have  sewer  systems, 
all  the  night-soil  being  removed  daily  by  farmers  as  food  for  their 
plants.  This  means  for  the  average  Oriental  farmer  a  life  of  unre- 
mitting toil,  and  little  hope  of  ever  rising  far  above  the  danger  line 
of  starvation.  "If,"  says  Dr.  King,  "the  agricultural  lands  of  the 
United  States  are  ever  called  upon  to  feed  even  1,200  millions  of 

1  King,  F.  H.  Farmers  of  Forty  Centuries.  Madison,  Wisconsin,  1911. 
Published  by  Mrs.  F.  H.  King. 


NITRATES  QUESTION  429 

people,  a  number  proportionately  less  than  one-half  that  being  fed  in 
Japan  to-day,  very  different  practices  from  those  we  are  now  follow- 
ing will  have  been  adopted."  But,  he  says,  first  must  come  the 
conviction  of  the  need  of  plant  feeding  and  better  soil  management. 
Soil  Exhaustion  and  Wheat. — Since  wheat  is  the  source  of  the 
"daily  bread"  of  a  large  portion  of  civilized  mankind,  the  wheat 
supply  question  affords  a  concrete  problem  in  soil  exhaustion. 
The  matter  can  best  be  brought  to  the  thoughtful  reader's  atten- 
tion by  citing  a  few  passages  from  the  Presidential  address  made 
to  the  British  association  at  Bristol  in  1898  by  Sir  William  Crookes, 
O.M.,  F.R.S.  The  importance  of  the  man  and  the  importance 
of  the  occasion  combined  to  given  the  address  great  weight.  Quot- 
ing passages  from  the  third  edition  of  this  address  (published  in 
1917),  we  find  the  opinions  of  Sir  William  expressed  in  these  words: 

"My  chief  subject  is  of  interest  to  the  whole  world — to  every  race — to 
every  human  being.  It  is  of  urgent  importance  to-day,  and  it  is  a  hfe-and- 
death  question,  for  generations  to  come.  I  mean  the  question  of  Food  supply. 
Many  of  my  statements  you  may  think  of  the  alarmist  order;  certainly  they 
are  depressing,  but  they  are  founded  on  stubborn  facts.  They  show  that 
England  and  all  civilized  nations  stand  in  deadly  peril  of  not  having  enough 
to  eat.  As  mouths  multiply,  food  resources  dwindle.  Land  is  a  limited  quan- 
tity, and  the  land  that  will  grow  wheat  is  absolutely  dependent  on  difficult 
and  capricious  natural  phenomena.  I  am  constrained  to  show  that  our  wheat 
producing  soil  is  totally  unequal  to  the  strain  put  upon  it  .  .  .  Wheat  is  the 
most  sustaining  food  grain  of  the  great  Caucasian  race,  which  includes  the 
peoples  of  Europe,  United  States,  British  America,  the  white  inhabitants  of 
South  Africa,  Australasia,  parts  of  South  America,  and  the  white  population 
of  the  European  colonies.  Of  late  years  the  individual  consumption  of  wheat 
has  almost  universally  increased.  In  Scandinavia  it  has  risen  100  per  cent 
in  twenty-five  years;  in  Austria-Hungary,  80  per  cent;  in  France  70  per  cent; 
while  in  Belgium  it  has  increased  50  per  cent.  Only  in  Russia  and  Italy,  and 
possibly  Turkey,  has  the  consumption  of  wheat  declined.  In  1871  the  bread 
eaters  of  the  world  numbered  371,000,000.  In  1881  the  number  rose  to 
416,000,000;  in  1891  to  472,000,000,  and  at  the  present  time  (1898)  they 
number  516,500,000  .  .  . 

"It  is  now  recognized  that  all  crops  require  what  is  called  a  'dominant' 
manure.  Some  need  nitrogen,  some  potash,  others  phosphates.  Wheat  pre- 
eminently demands  nitrogen,  fixed  in  the  form  of  ammonia  or  nitric  acid  ..." 

Nitrates  Question. — Sir  William  referred  to  experiments  at 
Rothamsted  in  the  use  of  nitrate  of  soda  in  improving  the  yield  of 
wheat.  A  field  was  planted  with  wheat  13  consecutive  years 
without  manure,  yielding  an  average  of  11.9  bushels  to  the  acre. 
For  the  next  13  years  it  was  seeded  with  wheat,  and  dressed  with 
560  pounds  of  nitrate  of  soda  per  acre,  other  mineral  constituents 
also  being  present.  The  average  yield  for  these  years  was  36.4 
bushels  per  acre — an  increase  of  24.5  bushels.  In  other  words, 
each  22.86  pounds  of  nitrate  of  soda  produced  an  increase  of  one 
bushel  of  wheat. 


430  FOOD  SUPPLY  PROBLEM 

"Let  us  remember,"  said  Sir  William,  ''that  the  plant  creates 
nothing;  that  there  is  nothing  in  bread  which  is  not  absorbed 
from  the  soil,  and  unless  the  abstracted  nitrogen  is  returned  to 
the  soil  its  fertility  must  ultimately  be  exhausted." 

What  is  Soil  Fertility?— From  65  to  95  per  cent  of  the  soil, 
by  weight,  is  made  up  of  finely  disintegrated  rock.  The  black 
color  is  given  to  the  soil  by  the  humus,  that  is,  the  decayed  vege- 
table and  animal  matter — the  so-called  organic  matter — of  all 
kinds.  This  matter  usually  ranges  from  2  to  5  per  cent.  The  soil 
also  contains  a  certain  amount  of  water  and  of  air.  These  ele- 
ments, taken  altogether,  constitute  the  plant  food.  Much  of 
this  plant  food  is  not  fit  for  use  by  the  plants  until  it  has  been 
acted  on  by  an  additional  element  in  the  soil,  namely,  the  soil 
bacteria.  Presence  of  plant  food  and  soil  bacteria  constitute 
fertility.  The  human  body,  for  instance,  contains  iron;  but 
the  unhappy  peison  who  lacks  iron  in  his  tissues  cannot  supply 
the  need  by  swallowing  "  raw  "  iron.  He  will  probably  eat 
foods  like  celery,  lettuce,  carrots,  etc.,  containing  iron  in  a 
digestible  form.  Thus  also,  with  wheat  for  instance,  which 
cannot  feed  on  raw  nitrogen.  Assume  then,  that  a  soil  has 
enough  water,  enough  sunshine,  enough  warm  temperatin-e  to 
insure  plant  growth,  enough  lime  to  prevent  acidity,  what  are 
the  chief  plant  foods  which  are  subtracted  from  the  soil  by  con- 
tinuous cropping?  The  three  chief  plant  foods  mined  from  the 
soil  by  cropping  are  nitrogen,  phosphorus  and  potash.  According 
to  forty-nine  analyses  of  soils  in  different  parts  of  America,  the 
average  acre  of  soil  contained  the  following  plant  food: 

Nitrogen 3,000  pounds 

Phosphoric  acid 4,000  pounds 

Potash 16,000  pounds 

Taking  the  average  wheat  crop  of  the  United  States  as  13.8  bushels 
per  acre  (as  it  was  for  the  period  1899  to  1908),  this  wheat  and  this 
straw  removed  each  year  from  the  soil  about  14.5  pounds  of  nitro- 
gen, 10.6  pounds  of  phosphoric  acid,  and  14  pounds  of  potash 
per  acre. 

Similar  calculations  may  be  made  for  other  crops,  some  taking 
more,  some  less  plant  food  from  the  soil.  Continuous  cropping, 
without  rotation  and  without  putting  anything  back  into  the  soil, 
gives  warning  of  soil  depletion  in  the  form  of  diminished  yields. 
And  yet  how  little  attention  the  average  farmer  in  the  newer  parts 
of  the  country  gives  to  this  warning.  And  herein  lies  one  of  the 
chief  evils  of  the  American  short-term  tenancy  system,  for  the 


LIEBIG  431 

tenant  has  no  compunction  in  ''mining"  the  fertiUty  of  his  land- 
lord's land. 

Liebig. — The  German  agricultural  chemist,  Liebig,  called  the 
attention  of  the  world  to  the  historical  and  economic  significance 
of  soil  exhaustion.  Existing  methods  of  farming  he  called  soil- 
robbery,  and  claimed  such  methods  would  in  time  render  the  soil 
completely  and  forever  barren.  The  phosphorus  and  potash  of 
the  soil,  says  Liebig,  may  be  called  the  "capital"  with  which  the 
farmer  carried  on  his  agriculture.  With  every  harvest  some  of 
this  ''capital"  is  drawn  off;  the  bigger  the  harvest,  the  bigger  the 
drain  on  this  "capital."  A  part  of  this  " capital "  is  fed  to  his  stock 
and  comes  back  in  manure;  a  part  is  sold  as  grain,  live  stock,  wool, 
milk,  cheese,  wood,  etc.,  in  the  cities,  and  only  a  little  of  this  ever 
gets  back  to  the  land.  The  soil,  therefore,  annually  gets  a  little 
poorer  by  this  drain.  Finally  this  "capital"  is  used  up.  It  is 
absolutely  necessary  to  return  to  the  soil  as  much  as  was  taken 
from  it. 

Liebig  painted  a  gloomy  picture  by  describing  the  past  and 
faded  agricultural  glories  of  Mesopotamia,  Persia,  Egypt,  Greece, 
Italy,  Sicily,  and  Spain.  Liebig's  various  critics,  particularly 
Conrad,  claimed  that  the  agricultural  decline  of  these  countries 
was  due  to  other  causes  than  soil  exhaustion,  such  as  deforestation, 
lack  of  irrigation,  bad  government,  government  price  fixing,  etc.^ 
Liebig  claims  that  the  soil  determines  the  history  of  nations. 
Conrad  claims  that  the  form  of  government — the  political  and 
social  regulations — have  more  influence  on  agriculture  than  on 
trade  and  industry;  have  more  influence  than  climate  or  the  method 
of  treating  the  soil;  so  that  agriculture  reaches  its  greatest  perfec- 
tion not  in  those  countries  most  favored  by  nature,  but  where 
the  governments  are  best. 

When  one  considers  the  millions  of  tons  of  commercial  fertilizers 
now  being  used  every  year  in  our  Eastern  States  and  the  scores 
of  pages  of  State  laws  to  "regulate"  this  traffic,  the  reahty  of  the 
problem  of  soil  exhaustion  becomes  apparent,  whatever  the  merits 
of  the  Liebig-Conrad  controversy.  For  soil  fertility  is  like  a  bank 
account — there  is  a  limit  to  the  amount  that  may  be  drawn  out. 

2  Conrad,  J.  Liebig's  Ansicht  von  der  Bodenerschopfung  iind  ihre  ges- 
chichtliche,  statistische  und  nationalokonomische  Begriindung  Kritish  gepriift. 
Jena,  1864.  Concerning  Spain  we  read,  "  Das  Aergste  war  aber  unbedingt,  dass 
dem  Bauer  selbst  der  Preis  bestimmt  wiirde,  zii  welchem  er  sein  Korn  verkaufen 
durfte,  und  dies  geschah  bereits  seit  der  Regierung  Alphons  X  und  wurde  erst 
im  vorigen  Jahrhundert  aufgehoben,"  p.  81.  "  Cette  loi  decourageait  le  fermier 
et  ajoutait  encore  a  son  apathie  naturelle."    Weiss  II,  96. 


432  POOD  SUPPLY  PROBLEM 

Soil  Destruction  Question. — Far  more  serious  than  soil  ex- 
haustion is  soil  destruction.  The  three  chief  ways  in  which  soil 
destruction  is  brought  about  are  over-cultivation,  over-grazing 
and  deforestation.  These  lead  to  erosion  by  wind  and  water. 
Deforestation  has  come  about  in  various  ways,  such  as  destruc- 
tion of  the  forest  by  farmers  for  the  purpose  of  securing  farms, 
careless  lumbering  methods,  and  forest  fires.  Steep  hillsides, 
deforested  by  farmers  or  logging  companies,  often  have  their  soil 
all  swept  away  by  the  washing  of  the  rain.  When  President 
Roosevelt  launched  his  campaign  for  conservation  he  issued  to 
Congress — really  to  the  country  at  large — an  illustrated  message 
showing  whole  valleys  in  China,  once  populous  with  teeming 
cities,  now  a  dreadful  desert,  due  to  the  complete  destruction 
of  the  soil.  Torrential  rains,  at  certain  seasons,  wash  down  the 
hillsides,  causing  bowlders  to  fill  the  valleys.  In  the  United 
States  there  are  doubtless  millions  of  acres  suffering  to  a  lesser  or 
greater  degree  from  the  damages  of  deforestation.  When  the  soil 
is  gone  and  the  bare  rock  exposed,  this  land  is  doubtless  rendered 
barren  forever. 

The  Soil  and  the  Man  on  the  Soil. — A  study  of  the  literature 
dealing  with  soil  exhaustion  and  soil  improvement,  and  an  obser- 
vation of  the  methods  used  by  successful  farmers  lead  to  the  con- 
clusion that  the  fundamental  question  is  not  the  soil,  but  the  man 
on  the  soil.  Some  farms  show  a  steady  decline  in  fertility,  until 
a  different  person  takes  charge.  Under  new  management  a  ''worn- 
out"  farm  becomes  again  productive.  And  what  is  more  signifi- 
cant, under  such  management  such  a  farm  often  proves  to  be  a 
case  of  ''increasiqg  returns"  on  the  investment. 

For  the  purposes  of  illustrating  in  a  concrete  manner  the  sig- 
nificance of  the  human  factor  in  the  ''soil-exhaustion"  problem, 
two  examples  will  be  given  from  "run-down"  New  York  farms 
which  were  rehabilitated  by  able  management.  The  first  example 
is  that  known  as  the  M.  J.  English  farm  in  Broome  County, 
southern  New  York.  The  second  is  known  as  the  T.  E.  Martin 
farm,  in  Monroe  County,  northwestern  New  York.  The  informa- 
tion concerning  these  farms  is  taken  from  two  bulletins  published 
by  the  United  States  Department  of  Agriculture.^ 

3  Burritt,  M.  C,  and  Barron,  John  H.,  An  Example  of  Successful  Farm 
Management  in  Southern  New  York.  Bulletin  No.  32,  United  States  Depart- 
ment of  Agriculture.  Burritt,  M.  C,  A  Successful  New  York  Farm.  Farmers' 
Bulletin  454,  United  States  Department  of  Agriculture. 


TWO  REHABILITATED  FARMS  433 

The  M.  J.  English  Farm. — The  English  farm  is  in  the  typical 
hill  region  of  southern  New  York,  and  was  in  a  condition  of  '^  dimin- 
ishing returns"  when  this  owner  took  possession.  Enghsh  bought 
this  162-acre  farm  in  1897,  for  $16,000,  one-half  in  cash,  one-half 
on  mortgage.  He  had  had  no  previous  farm  experience.  The 
farm  was  in  very  poor  condition.  English's  program,  laid  down  at 
the  outset,  included  (1)  improvement  of  the  dairy  herd,  (2)  diversi- 
fication, (3)  crop  rotation  to  improve  the  soil.  The  "scientific 
management"  of  this  farm,  which  resulted  finally  in  building  up 
the  worn-out  soil  and  in  increasing  the  owner's  net  income,  con- 
sisted largely  in  the  following  steps: 

Crop  rotation  was  introduced,  plus  the  application  of  lime  and 
commercial'  fertilizer,  plus  some  drainage.  The  rotation  included 
clover.  The  soil  was  put  in  good  tilth  by  proper  cultivation.  Part 
of  this  farm — about  72  acres— is  hill  land,  and  was  worth  less  than 
$20  an  acre  when  bought  by  English.  His  systematic  treatment  of 
this  piece  for  five  years  made  it  worth  at  least  $100  an  acre  at  an 
expense  of  less  than  $30  an  acre.  Speaking  of  this  hill  land,  the 
author  of  the  bulletin  says,  "An  income  of  $30.76  per  acre  for 
each  of  the  five  years  is  not  a  bad  record  for  abandoned  land." 

The  T.  E.  Martin  Farm. — ^The  Martin  farm  is  another  New 
York  farm  which  illustrates  the  relationship  between  scientific 
management  and  increasing  returns  in  agriculture.  This  farm  is 
in  the  northwestern  part  of  New  York  State,  and  was  in  very  poor 
condition  when  bought  by  young  Martin,  a  fanner.  There  was  a 
mortgage,  poor  fences,  poor  drainage,  and  more  or  less  run-out 
land.  The  farm,  57  acres,  was  bought  in  1892  for  $5,000.  It  was 
necessary  to  give  a  mortgage  of  $3,000  upon  the  place  at  the  time. 
To  make  this  debt  more  bm-densome,  there  followed  a  period  of 
low  prices  from  1892  to  1900.  Potatoes  sold  as  low  as  8  cents  a 
bushel,  wheat  48  cents  a  bushel,  rye  32  cents  a  bushel,  eggs  10  cents 
a  dozen,  butter  13  cents  a  pound,  and  lard  6  cents  a  pound.  These 
figures  are  all  taken  from  the  owner's  books. 

The  scientific  management  of  this  farm  included  these  steps: 

(1)  Rotation,  so  that  the  fertility  of  the  soil  was  not  only 
maintained  but  increased.  Wlieat,  clover,  and  timothy,  corn, 
potatoes,  buckwheat — these  crops  represented  the  usual  rotation 
scheme.  In  time  the  farm  was  cleared  of  stumps  and  fences,  and 
the  whole  thrown  into  three  large  fields  where  a  three-year  rotation 
was  regularly  and  systematically  followed. 

(2)  Drainage.  Much  of  the  soil  was  sour  and  ,even  boggy. 
Over  ten  miles  of  drain-tile  were  laid  during  18  years  at  a  cost  of 

28 


434 


FOOD  SUPPLY  PROBLEM 


$2500.  In  other  words,  the  drainage  system  represented  a  cost 
of  $44  an  acre. 

(3)  Fertihzers.  Nitrogen,  phosphoric  acid  and  potash  were 
supphed  to  the  land  in  the  form  of  commercial  fertilizer.  The 
quantity  of  commercial  fertilizer  used  was  reduced  each  year  as 
the  improvement  of  the  farm  fertiUty  made  its  use  less  necessary. 

Some  results  of  the  scientific  methods  used  are  shown  in  the 
wheat  yields,  which  were  as  follows: 


Year 
6-year  average 


1899 

8.1  bu. 
18.8 
18.0 
34.0 
40.0 
19.0 

1900       

1901 

1902      

1903 

1904       

Yield  per 
acre 


23.0 


Year 

1905 

1906 

1907 

1908 

1909 

1910 

6-year  average.  . 


Yield  per 
acre 


24.7  bu. 

22.7 

24.3 

18.3 

45.0 

34.0 


28.2 


The  potato  yield  showed  an  even  more  striking  gain  for  the 
later  years.  The  average  potato  yield  for  the  first  9-year  period 
was  132  bushels  per  acre;  for  the  next  9-year  period,  282  bushels 
per  acre. 

The  Farm  Income. — The  increase  in  the  farm  income  is  as 
impressive  as  the  increase  in  crop  yields.  The  average  annual 
receipts,  for  the  first  nine  years,  were  $1094.40;  the  average  income 
for  the  next  nine  years  was  $2786.33,  an  increase  of  155  per  cent. 
And  while  the  income  increased  155  per  cent,  the  expenses  in- 
creased but  102  per  cent,  thus  exhibiting  a  striking  case  of  in- 
creasing returns  in  agriculture.  The  author  of  the  bulletin  states, 
on  this  point : 

"  The  profitableness  of  this  farm  may  be  measured  in  another  way.  The 
owner  began  with  a  debt  of  $3,000  and  several  hundred  dollars  on  the  equip- 
ment. All  indebtedness  had  been  paid.  In  addition,  a  tile  drainage  system 
costing  $2500  has  been  put  into  operation  on  the  farm.  The  farm,  shop,  and 
house  equipments  have  been  increased  to  the  maximum  of  efficiency.  These 
and  other  improvements  have  doubled  the  value  of  the  farm  and  have  left  a 
considerable  cash  balance  in  the  bank.  All  this  must  be  credited  to  18  years 
of  good  farming  which  may  be  called  fairly  successful  financial  management." 

Conclusions. — If  one-half  the  farmers  would  employ  the  suc- 
cessful methods  now  used  by  the  few  best  farmers,  there  would  be 
no  soil  exhaustion  problem  for  many  years  to  come.  If  all  farmers 
were  to  use  the  skill  and  science  now  used  by  a  few  farmers,  there 
would  be  no  soil  exhaustion  problem  for  many  generations. 


REFERENCES  435 

QUESTIONS  ON  THE  TEXT 

1.  Show  that  the  food  supply  problem  is  a  dual  problem. 

2.  State  the  Malthusian  ideas  concerning  poverty  and  poor  relief.    State  the 

Malthusian  theory  of  population  (increases  and  checks). 

3.  What,  according  to  Malthus,  is  the  most  powerful  check  on  population 

in  Europe? 

4.  Give  Malthus's  statement  concerning  United  States  population. 

5.  Criticize  this  statement  of  Malthus. 

6.  Is  or  is  not  the  Malthusian  theory  of  population  correct? 

7.  What  are  the  unknown  factors  to-day  in  population  increases? 

8.  How  many  years  have  the  fields  of  Japan  and  China  been  cultivated? 

9.  How  is  soil  fertihty  maintained  in  these  older  regions? 

10.  State  briefly  the  impending  danger  of  a  world  wheat  shortage,  as  announced 

by  Sir  William  Crookes. 

11.  What  is  meant  by  soil  fertility? 

12.  What  are  the  three  chief  plant  foods  subtracted  from  the  soil  by  cropping? 

13.  The  average  acre  of  soil  in  America  contains  how  many  pounds  of  each 

of  these  three? 

14.  An  average  wheat  crop  removes  how  many  pounds  of  each  of  these  three 

per  acre? 

15.  State  briefly  the  claims  made  by  Liebig  as  to  the  meaning  and  danger 

of  soil  exhaustion. 

16.  How  did  the  critics,  especially  Conrad,  answer  Liebig? 

17.  Where,  according  to  Conrad,  does  agriculture  reach  its  greatest  perfection? 

18.  Summarize  the  conclusions  on  the  soil  exhaustion  question. 

19.  What  is  meant  by  the  Soil  Destruction  question?    How  are  soils  destroyed? 

20.  How  serious  is  the  question  of  soil  destruction  in  the  United  States? 

21.  Which  is  the  more  fundamental  problem,  the  soil  or  the  man  on  the  soil? 

Why? 

22.  Give  an  account  of  the  Enghsh  farm,  showing  how  increasing  returns 

were  secured. 

23.  Give  an  account  of  the  Martin  farm,  showing  how  the  soil  fertility  prob- 

lem was  solved.    Account  for  the  increasing  returns  on  this  farm. 

24.  Summarize  final  conclusions  as  to  soil  exhaustion  problem. 

QUESTIONS  SUGGESTED  BY  THE  TEXT 

1.  Give  the   "Trench  System"  of  restoring  soil  fertihty  as  practised  at 

Allahabad,  India. 

2.  Describe  the  methods  in  use  in  Japan,  Korea,  and  China  for  maintaining 

soil  fertihty. 

3.  Give  the  principal  sources  of  commercial  nitrogen;  phosphorus;  potash. 

4.  What  is  the  outlook  for  the  future  supply  of  these  three  forms  of  plant  food? 

5.  Cite  examples  that  have  come  to  your  notice  of  "worn-out"  land  being 

restored  to  fertile  condition  by  scientific  farming. 

6.  Cite  examples  of  fertile  lands  that  have  been  reduced  to  "waste  lands" 

by  bad  methods  of  treatment. 

REFERENCES 

1.  Malthus,  Rev.  T.  R.:    "An  Essay  on  the  Principle  of  Population," 
7th  edition.    London,  1872. 

2.  King,  F.  H.:    "Physics  of  Agriculture." 

3.  :   "The  Soil." 

4.  :   "Farmers  of  Forty  Centuries."     Madison,  Wisconsin,  1911. 

5.  Roberts,  I.  P.:    "The  Fertility  of  the  Land."    1898. 

6.  LiPMAN,  J.  G.:    "Bacteriology  in  Relation  to  Country  Life."    1908. 


436  FOOD  SUPPLY  PROBLEM 

7.  Warren,  G.  F.:  ''Elements  of  Agriculture."  13th  edition,  New  York, 
1913. 

8.  Crookes,  Sir  William:  "The  Wheat  Problem — Based  on  Remarks 
Made  in  the  Presidential  Address  to  the  British  Association  at  Bristol  in  1898." 
Revised.  New  York,  1900.  Same,  3d  Edition,  with  additional  chapter.  Lon- 
don and  New  York,  1917. 

9.  LiEBiG,  Justus:  "Die  Organische  Chemie  in  ihrer  Anwendung  auf 
Agrikultur,  Chemie,  und  Physiologic,"  1840. 

10.  :  "Die  Chemische  Prozess  der  Ernahning  der  Vegetabilien." 

1862. 

11.  :  "Die  Naturgesetze  des  Feldbaus,  1862. 

12.  :  "Agricultural  Chemistry." 

13.  Conrad,  J.  Liebig's:  "Ansicht  von  der  Bodenerschopfung  und  ihre 
Geschichtliche.  Statistische  und  Nationalokonomische  Begrlindung  Kritisch 
Gepriift."    Jena,  1864. 

14.  Lyon,  Fippin  and  Buckman:  "Soils,  Their  Properties  and  Manage- 
ment."   New  York,  1915. 

15.  Parker:    "Field  Management  and  Crop  Rotation."    St.  Paul. 

16.  Russell  and  Hastings:  "Agricultural  Bacteriology."  Madison, 
1915. 

17.  Stoddart,  C.  W.:    "Chemistry  of  Agriculture."    Philadelphia,  1915. 

18.  "Rothamsted  Memoirs." 

19.  Bulletins:  1.  "The  Maintenance  of  Soil  Fertility."  A  Quarter  Cen- 
tury's Work  with  Manure  and  Fertilizers.  Ohio  Agricultural  Experiment 
Station,  Wooster,  April,  1919,  Bulletin  336.  2.  "Commercial  Fertilizers." 
United  States  Department  of  Agriculture  Farmers'  Bulletin  222.  3.  "Lime 
and  Clover."  United  States  Department  of  Agriculture,  Farmers  Bulletin  237. 
4,  "Leguminous  Crops  for  Green-manuring."  United  States  Department  of 
Agriculture,  Farmers'  Bulletin  278.  5.  "Renovation  of  Worn-Out  Soils." 
United  States  Department  of  Agriculture.  Farmers' Bulletin  245.  6.  "Bulle- 
tins and  Pamphlets  issued  (free)  by  Soil  Improvement  Committee  of  the 
National  Fertilizer  Association,  Postal  Telegraph  Bulletin,"  Chicago,  111. 
7,  "Bulletins  of  International  Harvester  Company  of  Chicago']  (Agricultural 
Extension  Department).     A  large  number  of  bulletins  pertaining  to  soils. 

20.  Yearbook — Department  of  Agriculture:   1912 — Cameron,  Frank  K. 
"Possible  Source  of  Potash  in  the  U.  S.,"  523-537.    1913— Davis,  R.  O.  E. 
"Economic  Waste  from  Soil  Erosion."    207-220.     1916— Dana,  Samuel  T. 
"Farm,  Forests  and  Erosion."  107-135.    1917— Stine,  O.  C:    "The  World's 
Supply  of  Wheat,"  461-481. 

21.  Spain — "Problem  of  Provisioning  and  the  Policy  with  Regard  to  the 
Food  Supply."  International  Review  of  Agricultural  Economics,  July,  1918, 
585-603. 

22.  Hopkins,  Cyril  G.:  "Effect  of  Soil  Depletion  and  Soil  Enrichment 
on  Loan  Values  of  Farms."  Address  delivered  at  Ninth  Annual  meeting  of 
Life  Insurance  Presidents,  New  York,  Dec.  10,  1915.  (Betterment  of  Life 
Insurance  Series.) 


INDEX 


Abattoirs,  municipal,  388 
Acre  considered  standard  unit,  251 
Act,  Adams  (1906),  323 
Hatch  (1887),  323 
Hepburn,  356 
Morrill  (1862),  323 
Smith-Lever  (1914),  323 

Federal      funds      available 
under,  336 
vocational  education  of  1917,  324 
Adams,   A.   B.,  on  Perishable  Farm 

Product  Risks,  147 
Adams,  H.  B.,  History  of  Cooperation 

in  the  United  States,  173 
Agricultural    advertising    to    create 
demand,  246 
colleges,  State,  Federal  appropri- 
ations, 325 
conditions.  Congressional  inves- 
tigation of  (1898),  27 
facing  the  United  States,  411 
in     England     and     United 

States  similar,  97 
in   Great  Britain  and  Ire- 
land, 34 
of  Canada,  similar  to  that 
of  United  States,  13 
depression,  causes  and  remedies, 

26,27 
education,  five  Federal  laws  deal- 
ing with,  322 
employment    agencies,    private, 

104 
exports,  value  of,  5 
industry,  unorganized,  12,  13 
labor,  chapter  on,  96 

seasonal  nature  of,  98 
transportation    and    distri- 
bution problem,  106 
unorganized  movement,  104 
land,  area  of,  in  various  coun- 
tries, 421 
of  United  States,  7 
machinery,  improved,  benefits  of, 
116 
and     the     trust     question, 

chapter  on,  115 
industry    more     "capitalis- 
tic," 115 
press  and  scientific  farming,  282 
chapter  on,  279 


Agricultural,  press  of  United  States, 
list  of,  283 
pubhcations  on,  283 
prices  and  law  of  supply  and 
demand,  225 
and  valorization,  chapter  on, 

225 
higher  in  spring  than  in  fall, 

225 
pubhcations  on,  243 
problems    and    the    mail    order 

house,  156 
production,  statistics,  23 
products,  dechne  in  price  of,  41 
foreign     trade     of     United 

States  in,  423 
increasing  consumption  of, 
49 
progress,  per  cent   of  increase, 

1870-1910,  6 
Publishers'  Association,  282 
transportation,  188 

publications  on,  204 
unrest,  61 

wages,  reports  on,  113 
Agriculture,  anarchy  of,  chapter  on, 
15 
evidenced    by    overproduc- 
tion, 21 
and  labor,  present  theory  of  pro- 
tection of,  405 
Canadian  Council  of,  306 
capital  invested  in,  5 
capitalistic,  175 
census  reports  (U.  S.),  14 
chart  showing  rank  as  an  indus- 

tiy,.2.  ,    .     r     ■■ 

commissioner  of,   m   Louisiana, 

135 
cooperation  in,  158 
Department  of.   United  States, 

history  of,  315 
direct  aid  to,  in  Kansas,  313 
effects  of  pests  and  diseases  on,  19 
English,  economic  revolution  in, 

409,  410 
failure  to  coordinate  supply  and 

demand  in  field  of,  15 
Federal  Government  aid  to,  315 
flourishes  where  government  is 

best,  431 

437 


438 


INDEX 


Agriculture,  foreign  competition  in, 
chapter  on,  409 
^neral  State  aid,  314 
m  Denmark,  transition  in,  423 
industrial     concentration,     eco- 
nomic     differences      be- 
tween, 10 
revolution  in,  115 
International        Institute        of 

(Rome),  74-76,  113 
leaf   from    England's    notebook 

on,  409 
manufacturing,  commerce,  chap- 
ter on,  1 
New  England,  401,  402 
New  York  Agricultural  Society 

discussion  on,  53 
persons  engaged  in,  proportion 

of,  shows  a  decline,  3 
place  of,   in  modem  industrial 

society,  14 
primacy  of,  lost  due  to  economic 

evolution  of  our  country,  1 
profitable,  meaning  of,  30 
pubhcations  on,  cited,  112,  113 
rank  of,  among  our  industries,  1 
statistics  on,  1-3 
transition  in,  28 
unorganized  industry,  15 
value  of  product,  5 
Yearbook,    Department  of,  ar- 
ticles on  farming,  14 
Aid,  Federal,  other  forms  of,  326 

State,  success  of,  326 
Alfalfa  in  Argentina,  415 
Almonds,  California,  distribution,  147 
American  Federation  of  Labor,  305 

Society  of  Equitjr,  311 
Americans  employed  in  cotton  mills, 

401 
Anderson,  B.  M.,  Grain  Speculation, 

276 
Animal  industry,  bureau  of,  317 
Animals,    maladies    affecting,     1915 
report  on,  by  Secretary  of  Agricul- 
ture, 23 
Arable  land  in  United  States,  14 
Argentina  grain  producer's  need,  363 
Armour,  J.  O.,  The  Packers,  224,  389 
Atkeson,  T.  C,  History  of  the  Grange, 
309 

on  marketing,  311 
AustraUa,  a  country  of  large  hold- 
ings, 38 

"Back  to  the  land"  movement,  chap- 
ter on,  31 
Bailey,  L.  H.,  Testimony,  27 


"Banker-Farmer,"  the,  159 
Banks,  joint  stock  land,  182 
Bargaining,  collective,  153,  231,  241, 

308 
Barley,  cost  of  producing,  per  acre, 
260 
price  ranges,  278 
Barron,  John  H.,  432 
Beans,  loaded  improperly,  193 
Beef  exports  from  the  United  States, 
418 
industry,  report  on,  379 
trade,  Argentina's,  418 
Benjamin,  E.  W.,  cited,  155 
"Big  Busmess,"  228 
Big  farm  versus  small  farm,  question 

of,  31 
"Big  Six,"  379 

extent  of  control  by,  380 
Binders,  improvements  in,  120 

quahty  and  price  of,  120 
Biological  survey,  bureau  of,  320 
Black,  J.  D.,  cited,  77 
Bonanza  farming,  43-45 
Bonds,  United  States,  fluctuations  in, 

278 
Books  (see  Literature) 
Brand,  C.  J.,  of  the  Bureau  of  Mar- 
kets, 21 
Bucket  shop  fight,  352,  354,  355 
Budge,  Wm.,  quoted,  44 
Bureau  of    Corporations,   report  on 

lumber  industry,  10,  11 
Burritt,    M.    C,    on    county    fann 
bureau,  332,  335 
on  successful  farming,  432 
Butter,  cold  storage  record,  216 
statistics  on,  144 
Wisconsin,  marketing  of,  145 

Caffey,  F.  G.,  History  of  U.  S.  Depart- 
ment of  Agriculture,  327 

California  Fruit  Growers'  Exchange, 
report  of,  41-43 

Camp,    Wm.    R.,    and    the    Credit 
Union,  171 

Canada,  agricultural  condition  sim- 
ilar to  that  of  United  States,  13 

Canadian    Council    of    Agriculture, 
305-307 
achievements  of,  306 
aims  of,  306 

Cance,  A.  C,  Immigrant  Rural  Com- 
munities, 109,  110,  112 

Capitahsm  and  agriculture,  55 

Capitalistic  agriculture,  175 

Carver,  T.  H.,  cited,  76 

Cash  renters,  64 


INDEX 


439 


Cattle,  cost  of  producing,  does  not 
determine  selling  price,  244 
herd  of,  in  Argentina,  416 
Chantland,    W.  T.,   Valorization   of 

Coffee,  244 
Cheese,  a  staple  food,  50 
Chemistry,  bureau  of,  318 
China  and  Japan  oldest  agricultural 

districts,  428 
Chinese  and  Japanese  farmers,  254 
City,  drift  to  the,  106 
labor  for  farms,  109 
population,  increase  in,  108 
versus  country,  91 
Class  organization,  285 
Classes,  two  social,  264 
Closer  settlement  legislation  of  Aus- 

traha,  39 
Cold  storage,  chapter  on,  214 

effect  of,  on  prices,  221 
extent  and  use  of,  217 
government    regulation    of, 

222 
in  Russia,  218,  219 
influence  of,  on  health,  219 
inventions,  214 
pork,  fresh,  in,  220 
pubhcations  on,  224 
record  of  butter,  216 

of  eggs,  215 
suggested  improvements,  223 
warehouses,  217 

direct  refrigeration  sys- 
tem of,  220 
pubhc,  view  in,  218 
Collective  bargaining,  153,  308 
as  price  fixing,  241 
by  almond  growers,  232 
by  walnut  growers,  231 
Commerce,  history  of,  14 
Competition  question,  the,  49 
Competitors,  our   (Argentina),  413- 

419 
Conclusions  on  farming,  92 
Conference,  Winnipeg  retailers',  150 
Conrad,  431 

Consumer's  dollar,  division  of,  144 
Consumption -overproduction     prob- 
lem, 42 
Control,  concentration  of,  in  banking, 
railroading  and  manufac- 
turing, 12 
in  lumber  industry,  10 
in  other  industries,  11 
Cooperation   among  farmers,   pubh- 
cations on,  173 
and  production,  169 
economic  significance  of,  171 


Cooperation,  effect  of,  36 
essentials  in,  172 
farmers',  largest  example  among, 

165-168 
in  agriculture,  chapter  on,  158 
in  broader  sense,  158 
in  buying,  170 
in  Kentucky,  example   of,  162, 

163 
in  narrow  sense,  160 
in  selling,  169 
interest  of  granges  in,  298 
of  railroads  with  farmers,  159 
purpose  of,  161 
some  causes  of  failure  of,  164 
successful,  an  example  of,  162 
Cooperative  credit,  170 

in   America,   beginning    of, 
177 
elevator,  farmers',  164 
hail  insurance,  208-210 
insurance,  170 

movement,  success  of,  168,  169 
packing  houses,  387 
Com,  extreme  prices  of,  247 

cost  of  producing,  per  acre,  259 
method  of  shelling  in  Argentina, 
416 
Cornering  the  markets,  263 
Comers  in  grain,  348 
Corporation  farming,  66,  78 
Corporations,  Garfield  report  on,  379 
Cost  accounting,  other,  252 
problems  in,  255-257 
signs  of  progress,  255 
of  production  and  farm  account- 
ing, books  on,  258,  259 
chapter  on,  250 
importance  of,  257 
of   corn,    barley,    oats   and 
wheat,  259-261 
Costs  of  crop  production,  251 
Cotton  and  wheat,  crop  fluctuations, 
16 
dealings  in,  risky  for  producer, 
middleman,  speculator  or  spin- 
ner, 19 
exchanges,  report  of  Bureau  of 

Corporations  on,  19 
production  and  farm  value  of,  8 
Coulter,  J.  L.,  on  farm  laborers.  111, 
112 
Cooperation  Among  Farm- 
ers, 173 
Organization  Among  Farm- 
ers, 310  - 
Country  elevator,  storage  and  hedg- 
ing problems,  344 


440 


INDEX 


Country  life,  94 

newspapers,  weekly,  282 
real-estate  transaction,  a  typical, 
25,26 
County  agent  and  the  farmer,  331 
and  marketing,  334 
and  the  middleman,  334 
chapter  on,  329 
definition  of,  329 
difficulties  ahead  of,  333 
financing  of,  332 
functions  of,  330 
movement,  329 
agents  and  club  work,  333 
Credit,   cheap,   significance  of,    182, 
138 
cooperative^  170 

beginnmg    of    in    America, 
177 
farm,  chapter  on,  174 
land,  180 

long  and  short  time,  177 
new  view  of,  174 
union,  the,  178 

North  Carolina,  178 
unions,  criticism  of,  179 

North     Carolina,     financial 
statement  of,  187 
Crerar,  President  T.  A.,  of  the  United 

Grain  Growers,  168 
Crookes,  W.,  Wheat  Problems,  339, 

435 
Crop  estimates,  bureau  of,  321,  324 
prices,  20 
yields,  20 

and  prices,  relation  between, 
20 
Crops  and  Uve  stock,  table  of  increase 
or  decrease,  1870-1910,  17 
costs  of  producing,  250 
farm,  factors  of  uncertainty,  17 

values  of  five  leading,  339 
field,  annual  hours  of  labor  per 
acre,  261 
cost  per  acre,  253 
grain,  items  of  cost  for,  253,  254 
miscellaneous  factors  of  produc- 
tion cost,  254 
Cucumbers,  loaded  improperly,  193 
Cyclopedia  of  Agriculture,  155 

Dairy  products,  132 
Danish  migration  to  United  States, 
high  per  cent  of,  52 

agricultural  transition,  423 

cooperation,  36 

"peasant  proprietors,"  36 
Debt,  174 


Desjardins,    Alphonse,    founder    of 
American  rural  credit,  177 

Dillon,  John,  of  New  York,  136 

Diseases,  farm  crop,  18 

Dockage  a  weed  problem,  360 

question  in  relation  to  grain,  360 

Domeratzky,  European  Tariff  Policies 
After  the  World  War,  408 

Drayton,  C.  O.,    Farmers    Must  Be 
Cooperators,  310 

Drift  to  the  city,  106 

Dye,  F.,  quoted,  45 

Economic  reforms,  how  to  secure,  307 

significance  of  cooperation,  171 
Economics,  elementary,  materials  for 

the  study  of,  30 
Education  and  health,  91 
Eggs,  cold  storage  record  of,  215 

from  farmer  to  consumer,  145 

shipping  by  parcel  post,  141 
Elevators,  evolution  of  terminal,  356 

evolution  of  farmers',  357-359 
Ely,  R.  T.,  cited,  74 
Emery   on   stock   and   produce   ex- 
changes, 20 

cited,  266,  277 
English,  M.  J.,  farm,  433 
Entomology,  bureau  of,  320 
Equity  Union,  311 
Eschenburg  and  Dalton,  359 
Essentials  in  cooperation,  172 
Evolution  of  terminal  elevator — rail- 
road monopoly,  356,  357 
Exchanges,    organized,    services    of 
speculation  on,  272 

speculation  on  the  organized,  270 
Express  and  parcel  post  compared, 
197 

business,  195 

rural  motor,  199 

Family-size. farm,  46,  47 
Farm  accounting,  255 

cost  of  production  and,  250 

example  from  England,  261 

big,  versus  small  farm,  question 

of,  31 
bonanza,    of   West   and   North- 
west, 43 
bureau,  the  county,  105 
defined,  330 
growth  of  the,  332 
movement,  books  on,  335 
Bureaus,  American  Federation  of, 

289 
contributions,  90 
.credit,  chapter  on,  174 


INDEX 


441 


Farm  crop  insects  and  diseases,  18 
crops,  factors  of  uncertainty,  17 
employment,  irregular,  105 
expenses,  88 
family  size,  46,  47 
house  conveniences,  91 
household  labor  on  the  decline, 

103 
income,  89,  434 
Journal,  281 

labor  exchange,  national,  105 
Federal     government    and, 

105 
immigration  and,  109 
problems  in  England,  96 
question,  several  aspects  of, 

96 
supply  of,  194 
wage  in  England,  96 
wages   of,   on   the   increase 
100 
laborer,  life  of,  110 
land,  future  ownership  of,  13 
of  United  States  and  Canada, 

419 
rise  in  selling  price  of,  27 
large,  views  of,  48 
lease  tenure,  62 

machinery,  American,  in  Siberia, 
124 
annual  depreciation  on,  252 
labor-saving,  108 
purchase  of,  117 
management,  office  of,  321 
mortgages  increasing,  69 
organizations,  federation  of,  287 
owners,  age  of,  64 
paper,  best  type  of,  279 
point  of  view  of,  279 
the  speciahzed,  282 
two  pohcies  in  editing,  284 
worst  type  of,  280 
papers,  other  types  of,  281 
prices,  trend  of,  chart,  226 
problem  in   the   United  States, 

40 
produce,  perishable,  shipping  by 

parcel  post,  142 
product  receipts,  88 
products,  cost  of  production  and 
price,  233 
marketing  of,  145 
standardizing  and  advertis- 
ing of,  43 
property,    value    of,    for    years 

1850-1910,  3 
tenancy,  declaration  on,  81 
in  Canada,  per  cent,  81 


Farm  tenancy,  in  Missouri,  65 
in  Wisconsin,  65 
Wallace,  H.,  on,  81 
wages,  statistics,  101 
work,  by  women,  decline  since 
1871,  101 
in  Germany,  38 
of  foreign  birth,  102 
Farms,   average    size    of    in    United 
States,  51 
operated    by    tenants    increase 
faster  than  those  operated  by 
owners,  4 
per  cent  mortgaged,  79 

operated  by  tenants,  80 
size  of,  67 
small,  in  France,  33 
two  rehabilitated,  433 
Farmer,  American,  other  occupations 
of,  107 
and  railroad,  the,  191 
and  the  terminal  market,  347 
direct  State  aid  for,  312 
economic  condition  of,   chapter 

on,  83 
German,  living  conditions  of,  37 

customs  of,  36 
in  business,  311 
other  attractions  for,  92 
prosperous  Icelandic,   in   North 

Dakota,  93 
State  aid  for  the,  312 
Farmers  and  the  I.  W.  W.,  100 
better  business  for,  7 
Chinese  and  Japanese,  254,  428 
cooperation  among,   largest  ex- 
ample of,  165-168 
number  and  supply  of,  104 
of  Alabama,  44 
of  forty  centuries,  428 
pohtical  organizations  of,  301 

economic     background 
of,  302 
shifting  of,  81 
Farmers'  capital,  88 

cooperative  insurance  companies, 
205 
trucks,  200 
economic  income  too  low,  92 
Educational     and     Cooperative 

Union  of  America,  311 
elevator    movement,   immediate 
effect  of,  359 
weakness  of,  359 
elevators  copy  "regulars,"  359 

in  Canada,  359 
grain  elevators  in  United  States, 
301 


442 


INDEX 


Farmers'  income,  83,  95 

compared  with  city  incomes, 

90 
Federal  government  report 

on,  83,  84 
other  estimates,  87 
"survey"  method  of  deter- 
mining, 87 
institutes,  315 
labor  income  calculated,  89 
living,  what  the  farm  contributes 

to,  95 
middleman,  the,  152 
mutual     insurance     companies, 

205 
national  headquarters,  287-289 

organizations,  311 
organizations,  benefits  from,  285 
chapter  on,  285 
difficulty  of  classifying,  286 
local,  300 
national,  290 
pohtical     background      of, 

303 
problems  to  face,  307 
publications  on,  309,  310 
parties  in  the  past,  303 
Farming,  bonanza,  43-45 
effects  of,  44 
conclusions  on,  92 
conditions  in  foreign   countries, 

pubHcations  on,  52 
by  corporations,  66 
does  it  pay?  83 
example  of  successful,  84-86 
financial  profitableness  of,  332 
future  of,  52 
in  China  and  Japan,  428 
industry  in  New  Zealand,  40 
methods,  successful,  434 
practices,  best,  popularized,  86 
publications  on,  52 
report    of    Roosevelt    Country 

Life  Commission  on,  7-10 
versus  land  speculation,  chapter 
on,  24 
Federal  Farm  Loan  Act,  180-182 
Land  Banks,  the  twelve,  186 
Money  Trust  Investigation,  11 
Reserve  System  and  agriculture, 

183 
Trade    Commission,    report    on 
packing  industry,  382 
Fertihzer,  saving  of,  in  Germany,  38 
Field  crops  in  Canada,  419 
Filley,  H.  C,  cited,  154 
Fire  patrol,  319 


Flour  and  wheat  prices  from  farmer 

to  consumer,  143 
Food  problem,  425 

supply  problem,  chapter  on,  425 

publications  on,  435 
supplies,  government  control  of 
in    Germany    during    World 
War,  244-246 
Foods,  seasonal  production  of,  214 
Foodstuffs  and  manufactures,  value 

of,  413 
Foreign   competition  in  agriculture, 
chapter  on,  409 
pubHcations  on,  422,  423 
trade,    its    changes,    its   signifi- 
cance, 411 
Forest  service,  318 

Forestry  and  landscape  gardening,  194 
Forgan,  David  R.,  Grain  Financing, 

363 
France  cited  regarding  small  farms,  33 
Frear,  D.  W.,  on   marketing  small 

fruits  and  vegetables,  147 
Free  trade  in  land,  69 
principle,  404 
Fruits,  citrus,  statistics,  146 

Gallatin's  memorial,  403 
Galpin,  C.  J.,  cited,  74 
GambHng,  275 

Webster's  definition  of,  266 
Gaston,  H.,  Nonpartisan  League,  310 
George,  Henry,  on  Progress  and  Pov- 
erty, 30 
German  farmer,  customs  of,  36 
Gleaners,  311 

Goldenweiser,  E.  A.,  The  Farmer's  In- 
come, 95 
Government  regulation  of  cold  stor- 
age, 222 
Grain,  cash,  348 

crops,   distribution   of   cost  per 
acre,  253-254 
statistics  of  movement  of,  23 
elevator  manager,  343 

problems,  342 
elevators,  Buenos  Aires,  414 
exchange,     Chicago     Board     of 
Trade,  346 
evolution  of  the  organized, 
347 
exchanges,  trading  on,  349,  350 
futures,  348 
market,  manipulation  of  the,  350 

a  wide,  350 
markets  in  Argentina,  337 
mixing  in  elevators,  345 
price  fluctuations  of,  271 


INDEX 


443 


Grain,  "to  arrive,"  348 
trade  and  Russia,  420 
chapter  on,  337 
competition  in,  340 
competitive  nature  of,  339 
international  nature  of,  337 
past  organization  of  the,  347 
present  organization  of,  341 
pubhcations  on,  361-363 
relation  of  future  trading  to 
financing,  363 
Grains,  cost  of  growing,  252 
Grange,  the,  291 

achievements  of,  299 
as  an  institution,  292 
decUne  of  the,  295 
economic  program  of,  296 
first  local,  292 
history  of.  309 

interest  of,  in  cooperation,  298 
low  prices  and  the,  299 
purpose  of,  293 
rapid  growth  of,  294 
renewed  growth  of,  296 
States,  291 
Gray,  C.  E.,  Keeping  of  Butter,  224 
Greeley,  M.  F.,  quoted,  45,  115 
Green  bug,  18 

Haggard,  H.  Rider,  on  the  poor  and 

the  land,  74 
Hall,  Carohne  A.,  and  the  Grange,  292 
Hanulton's  errors,  404 
Hammond,  Harry,  quoted,  44 
Harvester  Company,  case  against,  125 
case  for  the,  122-125 
case  for  or  against,  122 
trust,  118 

earnings,  122 
exclusive  contract,  119 
history  of,  118 
investment   and   capitaUza- 

tion,  119 
prices,  at  home  and  abroad, 

121 
repairs  procured  from,  121 
Hasbach,    W.,    English  Agricultural 

Laborer,  113 
Health,    influence    of    cold    storage 

on,  219 
Hedrick,  W.  O.,  cited,  156 
Herrick,  M.  T.,  How  to  Finance  the 

Farmer,  179,  185 
Herron,  L.  H.,  The  Farmers'  Union, 

310 
Hibbard,  B.  H.,  cited,  76,  156 
Hill,  James  J.,  For  Pure-bred  Sires,  159 
Hoagland,  H.  E.,  quoted,  109 
Hoard,  W.  D.,  editor,  281 


Hockaday,  R.  W.,  on  marketing,  21 

Holland  cited  on  peasant  proprietor- 
ship, 35 

Home  bureaus,  333 

economics,  office  of,  321 

Hopkins,  C.  G.,  Soil  Depletion  and 
Soil  Enrichment,  436 

Howard,  J.  R. ,  President  of  American 
Farm  Bureau  Federation,  290 

Hudson  Bay  Company  as  speculators, 
277 

Huebner,  Grover,  cited,  154 

Hughes,  H.  J.,  on  the  hired  man,  105 
on  editorial  poficy,  284 

Hunt,  Dean  T.  F.,  quoted,  175 

Hyder,  J.,  Land  NationaUzation,  407 

Immigration  and  farm  labor,  109 
Income  from  unpaid  labor,  89 
Increment,  measured,  30 
Independent  Harvester  Company — 

126-128 
Industrial  evolution  of   the  United 

States,  14 
Insects,  farm  crop  pests,  18 
Insurance,  chapter  on,  205 
cooperative,  170 
farmers'  mutual  hail,  statistics, 

212 
hail,  present  tendency,  211 
mutual  hail,  208-210 
North  Dakota  State  hail,  207, 208 
pubhcations  on,  213 
Saskatchewan  State  hail,  206 
International    Institute    of    Agricul- 
ture, Rome,  publications  on  agri- 
cultural   economics,    52,   74,    113, 
173,  185,  204,  328 
Interurban  electric  lines,  197 
Itahan,  cotton  tenant:  in  Mississippi 

delta,  110 
I.  W.  W.,  61,  100 

Jackson,  T.  C,  on  farm  accounting, 
261 

Jam  production  in  England,  50 

Jefferson's  views,  31 

Jenkins,  W.  C,  Truth  About  Cold 
Storage,  224 

Jessness  and  Kerr,  Cooperative  Pur- 
chasing and  Marketing,  173 

Johnson,  O.  R.,  on  big  or  fittle 
farms,  52 

Kelley,  O.  H.,  founds  of  the  Grange, 

292 
Kennedy,  Joseph,  quoted,  93 
King,  F.  H.,  Physics  of  Agriculture, 

435 


444 


INDEX 


Kirkland,  J.,  Wheat,  Flour  and  Bread 

War  Prices,  363 
Knapp,  Bradford,  quoted,  86 

Seaman  A.,  329 
Knights  of  Labor,  304 

Labor  population,  floating,  crime  a 

by-product  of,  99 
Laing,  on  Continen,tal  peasant  pro- 
prietor, 32 
on  Norway  farmers,  32 
Lake  transportation,  197 
Land  certification,  71 

commercial  value  versus  market 
value,  28 
Land  credit,  180 
free  trade  in,  69 
overcapitalized,  24 

bad  thing  for  farmers,  29 
ownership,  tenure,  and  taxation 

of,  30 
question,  report  of  Commission  on 
Industrial  Relations  on,  59,  60 
tenure,  chapter  on,  53 

interpretation  of  tendencies 
of,  54 
title  system  of  recording,  71 
trading  problem,  72 
value,  relation  of  tenancy  to,  82 
Leadership  for  the  farmer,  308 
Legal    and    economic    questions    on 

monopolies,  377,  378 
Leiserson,  W.  M.,  on  farm  labor,  112 
Liebig,  J.,  431 

on  agriculture  and  organic  chem- 
istry, 435 
on  wheat  conditions,  339 
Liebig-Conrad  controversy,  431 
Life  insurance  companies,  183 
Limitation  of  output,  308 
Lipman,  J.  G.,  Bacteriology  in  Rela- 
tion to  Country  Life,  435 
Literature     on     agricultural     labor, 
112-114 
machinery    and    the    trust 

question,  129 
press,  283 
prices,  243 
agriculture,  23,  52 

issued    by    United    States 
Department    of    Agricul- 
ture, 328 
manufacturing,     commerce, 
14 
cooperation  among  farmers,  173 
cost    of    production    and    farm 

accounting,  258 
economic  condition  of  the  farmer, 
95 


Literature,  farm  bureau  movement, 
335 
farmers'  organizations,  309,  310 
farming.  52 

and  land  speculation,  30 
food  supply,  435,  436 
foreign  agricultural  competition, 

422,423 
grain  exchanges,  361-363 
insurance,  213 
land  tenure,  74-78 
live-stock    and    meat    industry, 

389,  390 
marketing  and  the  middleman, 
154-156 
farm  products,  154-156 
milk  marketing,  155,  156 
rural  credit,  185 
speculation,  276,  277 
State  aid,  327,  328 
taxation  problems,  407,  408 
transportation,  204 
Liverance,  W.  B.,  quoted,  157 
Livermore,  K.  C,  of  Cornell,  88 
Live  stock  and  crops,  table  of  increase 
or  decrease,  1870-1910,  17 
and  meat  industry,  365 

pubUcations      o  n , 
389,  390 
competition,  foreign,  371 
countries,  367 
decrease  in  number  of,  367 
factors   making   against   an   in- 
crease of,  369 
for  an  increase  of,  368 
fluctuation,  16 
foreign  competition  in,  370 
future  of,  367 
in  Australia,  371 
in  South  Africa,  371 
in  South  America,  371 
industry,  westward  movement  of, 

366 
production,  365 
shifts  in,  366 
situation,  365 

supplies  and  prices,  stabiHzing, 
390-392 
Lloyd,  O.  G.,  on  farm  ownership,  64 
Long  and  short  time  credit,  177 
Losses  in  soil  fertility,  254 
Lowell,  Hoit  &  Company,  Grain^  359 
Lowell,  S.  J.,  of  State  and  National 

Grange,  293 

Lubin,  David,   of  the  International 

Institute  of  Agriculture,  Rome,  204 

Lumber     industry.     Report    of    the 

Bureau  of  Corporations  on,  10,  11 

Luxuries,  definition  of,  41 


INDEX 


445 


Machinery,  labor-saving,  108 
Macklin,  T.  H.,  cited,  156 
Magill,  R.,  on  wheat  prices,  232 
Mail   order   house   and   agricultural 

problems,  156 
Maladies  of  farm  animals,  23 
Malthus,  T.  R.,  Principle  of  Popula- 
tion, 435 
Market,  cornering  the,  273 

director.  State,  functions  of  a,  134 
Marketing  activities.  State,  131 

and    the    middleman,    chapter 

on,  130 
costs,  152 

money,  151 
direct,  152 
in  Idaho,  132 
law  of  California,  132 
oflScials,  national  association  of, 

140 
parcel  post,  140 
peach  crop,  21 
problems  in  Texas,  139 
of  Washington,  139 
pubhcations  on,  154-156 
scene  at  Russian  fair,  420 
seasonal,  21 

State  field  agents  in,  139 
work  in  New  York,  136 
in  North  Carolina,  137 
Markets,  Bureau  of,  140,  321 
in  Ohio,  138 
in  Pennsylvania,  138 
cornering  the,  263 
department  of,  in  Michigan,  136 
Martin,  T.  E.,  Farm,  433 
Mathis,  Mrs.  G.  H.,  Farmer  Leader, 

158 
McKenzie,  M.,  on  transportation  of 
Uve  stock,  189 
Live-stock  Trade  in  South  Am- 
erica, 371 
McKenzie,  R.,  of  Winnipeg,  305 
McNiel,  John,  Farm,  67 
Mead,  El  wood,  cited,  77,  78 
Meat  a  dear  food,  366 
inspection.  317 
margins  oi  profit,  143 
packers,  largest,  373 
packing  industry,  372 
plants,  371 
Meats  fresh  and  cured,  426 
Michell,H.,The  Grange  in  Canada,310 
Middleman,  cost  of,  142 
elimination  of,  153,  157 
marketing  and  the,  chapter  on, 

130 
problem,  probable  solution  of,  149 
services  of  the,  148 


Middleman,  speculative,  function  per- 
formed by,  269 
Milk,  ideal  food,  50 

marketing,  books  on,  155,  156 
Mill,  John  Stuart,  on  peasant  pro- 
prietors, 34 
Misused  terms — hoarding,  262 
Mitchell,  W.  C,  History  of  Prices 

During  the  War,  244 
Morgan,  J.  P.  &  Co.,  Bankers,  12 
Morman,  J.  B.,  Principles  of  Rural 

Credit,  185 
Mortgage  and  tenancy  problems,  65 
Mortgages,  farm,  increasing,  69 
Mowers,  improvements  in,  120 
Mowing     machines,     American,     in 

Italy,  124 
Myrick,  H.,  How  to  Cooperate,  155 

National    Agricultural    Organization 
Society,  171 
Farmers  League,  303 
Nitrates  question,  429 
Nonpartisan  League,  302,  303 
Norway  has  best  social  and  economic 

conditions,  32 
Nourse,  E.  G.,  cited,  14,  155 
Nystrom  on  economics  of  retailing, 

149,  150,  155 

Oats,  cost  of  producing,  per  acre,  260 

extreme  prices  of,  248,  249 
Ocean  transportation,  201 

and  the  World  War,  202 
Organization,  strong,  example  of,  286 
Osman  on  Hepburn  Act,  356 
Output,  limitation  of,  308 
Overcapitahzed  land,  24 

a  bad  thing  for  farmers,  29 
Owner  farming,  view  of,  57 

Packer,  first  plant  of  a  large,  373 
large,  first  plant  of,  373 

plant  of,  sixty  years  later, 
374 
Packers  and  price  question,  381 

Big  Five,  dissolution  of  the,  387 
combination  among,  384 
Federal  Trade  Commission  re- 
port on  (1918),  382 
magnitude  of  business,  382 
potential  competition,  380 
profits  of,  381 

real  evil  of,  and  the  remedy,  385 
reply  of,  to  Federal  Trade  Com- 
mission Report,  385 
responsible  government  for  the, 

386 
side  lines  of,  377 


446 


INDEX 


Packers,  transportation  and  distribu- 
tion by,  376 
Packing  house,  by-products,  utiliza- 
tion of,  376 
Government   inspection   in, 

378 
situation,  evils  of,  remedies 
for,  384 
houses,  cooperative,  387 

inspection  and  grading  in, 
377 
Pahner,  D.  B.,  on  educating  the  con- 
sumer, 149 
Parcel  post  and  express  compared,  196 
marketing,  140 
shipping  eggs  by,  141 

perishable  farm  produce 
by,  142 
Parker,  Field  Management  and  Crop 

Rotation,  436 
Peaches,   Cahfornia,  collective  mar- 
keting of,  146 
Pearson,  R.  A.,  Agricultural  Organiza- 
tions in  Europe,  310 
Peasant  proprietor  in  Holland,  35 
'  proprietors,  34 

in  Denmark,  36 
proprietorship  in  Norway  cited, 
32 
on  the  Continent,  32 
Peffer,  Senator,  Report  of,  on  Agri- 

cultm-al  Depression,  26,  27 
Perishabihty,  risks  from,  147 
Pests  and  diseases,  effects  on  agri- 
culture, 19 
"Phantom  grain"  question,  351 
Pickell,  J.  R.,  Agricultural  Argentina, 

363,  423 
Pierson,  C.  W.,  Rise  and  Fall  of  the 

Grange  movement,  310 
Pit  scalpers,  351 
Plant  industry,  bureau  of,  318 
Plunkett,   Sir   Horace,   on  rural  life 

Sroblems,  7 
tical  reforms,  how  to  secure,  307 
Poole,  R.  R.,  quoted,  44 
Pope,  J.  E.,  cited,  226 
Population,  city,  increase  over  coun- 
try, 51 
Malthusian  theory  of,  425 
Popuhst  Party,  304 
Pork,  fresh,  in  cold  storage,  220 
Porter,  W.  R.,  on  farm  labor,  106 
Potato  marketing,  132 

production,  fluctuations,  16 
Potatoes,  government  inspection  of, 
323 
improperly  packed,  194 
marketing  of,  discussions  on,  145 


Powell,  G.  H.,  on  citrus  fruit  selling, 
42 
consumer's  dollar,  146 
Powers,  LeGrand,  on  decline  in  price 
of  agricultural   products,   41, 
quoted,  45,  106,  108,  408 
Pratt,  E.  A.,  on  small  holders,  28, 36, 74 
Press,    Agricultural,    and    Scientific 

Faiming,  282 
Price  and  value,  239 
equilibrium,  229 
fau-,  229 

conclusions  on,  240 
fixing,  229 

collective  bargaining  of,  241 
in  practice,  230 
fluctuation,  risks  in,  147 
fluctuations,  24&-249,  271 
theory,  227 
Price,  T.,  on  the  good  and  wise  cor- 
poration, 67 
Prices,  effect  of  cold  storage  on,  221 
extreme,    of    wheat,    corn    and 

oats,  246-249 
just,  228,  229 
Problem  of  land  trading,  as  Vermont 

sees  it,  72 
Production,  cost  of,  importance  of, 

257 
Prom,  Brynjolf,  quoted,  44 
Prosperity,  farmer's,  variable  factors 

in,  20 
Protection,  Hamilton  on,  399,  400 
of  agriculture,  theory  of,  405 
Protective  pohcy  in  1816,  399 
tariff,  397 
and  conditions  in  1789,  398 
policy,    introductory   state- 
ment, 397,  398 
theory  and  practice,  398 
workings  in  New  England, 
398 
Publications  (see  Literature) 
Public  roads,  bureau  of,  321 

Quaintance,  H.  W.,  Influence  of  Farm 
Machinery  on  Production  and 
Labor,  108,  129 

Question,  soil  exhaustion,  428 

Railroad  forestry  management,  194 

marketing  service,  193 
Railroads,  188 

and  agricultural  education,  192 

and  the  farmer,  191 

discontent  against,  189-191 

evils  of,  188 

securing  new  settlers,  192 
Railway  finance,  191 


INDEX 


447 


Raisins,  California,  distribution,  147 
Real  estate  exchanges,  73 
Reaper,  first  successful  (1831),  116 
model  of  1847,  121 
model  of  1858,  121 
modern  self-binder  and,  122 
References  (see  Literature) 
Refrigeration  in  Moscow,  219 
Refsell,    V.    N.,    Farmers'   Elevator 

Movement,  363 
Rent  contract  of  tenants,  61 
Report  of  Bureau  of  Corporations  on 
Lumber  Industry,  14 
Industrial  Commission,  14 
Resources,  natural,  exploitation  and 

conservation  of,  7 
Retailing,  Nystromoneconomicsof,  150 

system,  an  ideal,  150 
Rhodes,  J.  F.,  Taxation  Problems,  408 
Road  construction,  322 
Roads,  good,  198 

valuable  to  farmer,  201 
Roberts,  LP.,  FertiHty  of  Land,  435 
Rogers,    T.,    Agricultural  Prices  in 

England,  244 
Roosevelt  Country  Life  Commission, 

Report  on  Farming,  7-10 
Roosevelt,    President,     Reforms     in 

Grain  Trade,  356 
Rubinow,  I.  M.,  Russian  Wheat  and 

Flour,  422 
Rural  credit  in  Europe,  studied  by 
United  States,  176 
credits,  pubUcations  on,  185,  186 
districts  of  England,  low  wages 

in,  97 
motor  express,  199 
population,     decrease     of,     for 
decade  1900-1910,  114 
of    Middle    West,    loss    in, 
shown,  107 
RusseU    and    Hastings,  Agricultural 
Bacteriology,  436 

Sager,  Hiram,  American  Grain  Mer- 
chant, 357,  358 

Saskatchewan  Cooperative  Elevator 
Company,  168 

Scholtz,  W.  C,  of  Idaho,  132 

Seasonal  production  of  foods,  214 

Sedgwick,  Prof.  Wm.  T.,  quoted  on 
cold  storage,  221 

Service,  selUng  is  a,  149 

Shade,  Charles,  quoted,  84 

Share  croppers,  64 
renters,  64 

Silk  culture,  312 

Simons,   A.    M.,   on   capitahsm  and 
agriculture,  55 


Single  tax,  393 

apphed   to    city   and   farm 

land,  396,  397 
argument  for,  394-396 
definition  of,  393 
incidence  of,  393 
question  at  issue,  396 
Size  of  farms,  67 

Slaughtering,  division  of  labor  of,  375 
Small  holdings,  an  objection  to,  36 
Smith,  C.  L.,  Dakota  Farmer,  25 
Social  or  individual  viewpoint  con- 
sidered, 45 
Soil  and  the  man,  432 

destruction  question,  432 
exhaustion  and  wheat,  429 

cause  of  decline  of  nations, 
431 
fertility,  430 

losses  in,  254 
Soils,  bureau  of,  320 
Speculation   and   price   fluctuations, 
352 
and  pubhc  interest,  273-275 
chapter  on,  262 
definitions  of,  265 
its  evils,  273 
its  services,  268 
pubhcations  on,  276,  277 
two  kinds  of,  267 
Speculator,  food,  three  functions  of, 
270 
second  function  of  the,  269 
Speculators  and  "the  Charter  of  New 

England— 1620,"  277 
Spillman,  W.  J.,  quoted,  46,  56 
Stabilizing  prices,  392 
Standardizing    and    advertising    of 

products,  43 
State   aid   for   the    farmer,    chapter 
on,  312 
in  sugar  beet  culture,  312 
pubhcations  on,  327,  328 
department   of   agriculture   and 

the  police  power,  315 
market  director,  functions  of,  134 
State  marketing  activities,  131 
States  relation  service,  320 
Stelzle,  Charles,  quoted,  53 
Stockyard,  Chicago  (1861),  372 

fifty  years  later,  372 
Strawberry  marketing,  162 

Taft,  President,  on  rural  credit,  176 
Tarbell,  I.  M., Tariff  in  Our  Times,  407 
Tariff,  Gallatin's  memorial  on,  403 
labor  and  capital,  403 
Le  Grand  Powers  on,  408 
protective,  and  profits,  404 


448 


INDEX 


Tariff,  protective,  effect  on  farmer's 
crop  prices,  406 
Walker  on,  403 
Tax,  single,  393 

Taxation  problems,  chapter  on,  393 
Daniel  Webster  on,  408 
publications  on,  407,  408 
Taylor,  H.  C.   cited,  156 

on  price-fixing,  231 
Telephone,  farmers'  cooperative,  170 
Tenancy  and  mortgage  problems,  55 
farm.  Federal  government  report 
on,  62,  63 
pubhcations  on,  76-78 
farmmg  on  increase  in  United 

States,  55 
relation  of,  to  land  value,  82 
statistics,  55 
Tenant  class  a  menace,  discussion  on, 
60,61 
farmer,  rent  contracts  of,  61 
farming  in  the  cotton  belt,  64 
report  on  evils  of,  57-59 
view  of,  56 
Tendency  of  large  farmers  to  absorb 

small  farmer,  67 
Terminal  warehouses,  357 
Thomson,  E.  H.,  Farm  Bookkeeping, 

259 
Threshing  outfit  in  Argentina,  417 
Tobacco  consumption,  50 

distribution  statistics,  146 
production,  fluctuations,  16 
Tornado,  view  of,  316 
Torrens  system  of  recording  titles,  71 
Tousley,  EJ.  M.,  on  cooperation,  127 
Trade  acceptance,  184 
Trading,  cash  and  future,  263 

cost  of  future,  352 
Transportation,  chapter  on,  188 
farmers'  cooperative  truck,  200 
Great  Lake,  197 
in  Russia,  by  wagon,  199 
motor  truck,  200 
ocean,  201 
pubhcations  on,  204 
river  and  canal,  197 
Tucker,  G.  M.,  American  Agricultural 

Periodicals,  283 
United  Grain  Growers,  165-168 
United  States  a  beef  exporter,  371 

studies     rural       credit     in 

Europe,  176 
"Weekly    News    Letter    to 
Crop  Correspondents,"  30 

Valgren,  V.  N.,  Farmers'  Mutual  Fire 

Insurance  Company,  213 
Valorization,  agricultural  prices  and, 

225 


Valorization,  effects  of,  236 

in  Brazil,  233-239 
Value  and  price,  239 

relation  of,  to  cost  of  production 
and  demand,  240 
Vogt,  P.  L.,  on  farmer's  income,  87 
von  Engelken,  F.  T.  H.,  quoted,  36 
von  Tungeln,  cited,  95 
Vrooman,  Carl,  on  farm  problems,  21 

Walker's  Report,  on  the  tariff,  403 
Wallace,  Henry,  on  farm  tenancy,  81 

editor,  281 
Warren,  G.  F.,  "  Survey,"  88 

on  price-fixing,  229,  243,  244 
Washington,    George,    A  Successful 

Farmer,  94 
Weather  Bureau,  317 
Webster,  Daniel,  on  the  tariff,  402, 

408 
Weinstock,  Harris,  of  Cahfomia,  133 
Weld,  L.D.H., live-stock  and  market- 
ing questions,  145,  154,  389 
Wheat  conditions,  future,  forcasts  on, 
339 
and  cotton,  crop  fluctuations,  16 
and  flour  prices  from  farmer^to 

consumer,  143 
average  annual  prices,  412 
crop-producer  to  consumer,  143 
extreme  prices  of,  246,  247 
harvest,  where  and  when  every 

month,  338 
pit,  views  of,  353 
price  of,  232 
soil  exhaustion  and,  429 
spring,    cost   of   producing,    per 

acre,  261 
winter,  cost    of  producing,    per 

acre,  260 
yields,     results       of      scientific 
methods,  434 
Whittaker,   Sir  Thomas,   on   owner- 
ship, tenure  and  taxation  of  land, 
30,  407 
Wilcox,  E.  v..  Department  of  Agri- 
culture  Plan  for  Handhng  Farm 
Labor  Problem,  112 
Wiley,  H.  W.,  on  tobacco  statistics,  50 
Wilson,  Henry  D.,  of  Louisiana,  135 
Wilson,  President,  on  self-help,  285 
Wilson- Wallace  Report,  34 
Woman's  land  army,  103 
Women  and  war  work,  103 
Wright,  C.  D.,  Industrial  Evolution  of 
the  United  States,  14 

Young,  A.,  on  English  farming,  94 
Travels  in  France,  33 


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